If shareholders want to know how much profit a firm is making on their entire investment in the firm, the shareholders should look at the:
A) Profit margin.
B) Return on assets.
C) Return on equity.
D) Equity multiplier.
E) Earnings per share.

Question

Quizplus · Accepted Answer

Return on Equity (ROE) measures the amount of profit a company generates with the money shareholders have invested. It is a key indicator of financial performance from the perspective of shareholders, showing how effectively their capital is being used to generate profits.

If Shareholders Want to Know How Much Profit a Firm