If an investor (shareholder) discovers by analysing financial statements that she 'lost 5 cents for each dollar invested in the company', which ratio did she examine?
A) Debt to equity
B) Debt to assets
C) Return on equity
D) Financial leverage

Question

Quizplus · Accepted Answer

The ratio she most likely examined is the return on equity (ROE), which measures the company's net income as a percentage of shareholder equity. A negative ROE indicates that the company's earnings were insufficient to cover its costs, resulting in a loss for shareholders. The other ratios listed do not directly reflect a loss for shareholders.

If an Investor (Shareholder) Discovers by Analysing Financial Statements That