If a firm's ROA and ROE are equal, it can be concluded that the firm is:
A) losing money.
B) liquid enough to pay some extra dividends.
C) financed by all equity.
D) financed by a high proportion of debt.

Question

Quizplus · Accepted Answer

When a firm's Return on Assets (ROA) and Return on Equity (ROE) are equal, it indicates that there is no financial leverage, meaning the firm is financed entirely by equity without any debt.

If a Firm's ROA and ROE Are Equal, It Can