The financial ratio measured as net income divided by total equity is known as the firm's:
A) profit margin.
B) return on assets.
C) return on equity.
D) asset turnover.
E) earnings before interest and taxes.

Question

Quizplus · Accepted Answer

The formula for return on equity is net income divided by total equity, so this ratio describes the firm's ability to generate profits from the equity invested by shareholders.

The Financial Ratio Measured as Net Income Divided by Total