Which of the following has the most significant influence on return on equity?
A) common dividends
B) principal payments
C) accruals
D) operating income

Question

Quizplus · Accepted Answer

Operating income directly impacts the numerator of the return on equity formula (net income/equity), making it the most significant factor influencing return on equity. Common dividends and principal payments impact equity, but not the numerator. Accruals impact both the numerator and the denominator, but they are typically less significant than operating income.

Which of the Following Has the Most Significant Influence on Return