The profitability ratio that measures the return that shareholders earned on their investment in the firm is the:
A) operating profit margin
B) return on equity
C) net profit margin
D) return on assets

Question

Quizplus · Accepted Answer

Return on equity (ROE) measures the net income a company generates per dollar of shareholder's equity, showing how efficient the company is at using shareholder's investments to generate profits. It is the profitability ratio that measures the return that shareholders earned on their investment in the firm. The other options are also profitability ratios, but they do not specifically measure the return for shareholders.

The Profitability Ratio That Measures the Return That Shareholders Earned