Return on common stockholders' equity is most closely related to

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Quizplus · Accepted Answer

Return on common stockholders' equity measures the rate of return on the portion of equity invested by common stockholders. This is closely related to return on assets, as assets generate profits which in turn generate return on equity. Additionally, leverage (debt to assets ratio) affects the return on equity as it can magnify returns or losses. Therefore, option D is the best choice as it includes both return on assets and leverage. The other options are not as closely related to return on equity.

Return on Common Stockholders' Equity Is Most Closely Related to