If shareholders want to know how much profit a firm is making on their entire investment in the firm,the shareholders should look at the:
A) profit margin.
B) return on assets.
C) return on equity.
D) equity multiplier.
E) earnings per sharE.

Question

Quizplus · Accepted Answer

Return on equity (ROE) calculates the amount of profit a company generated divided by the total amount of shareholder equity invested in the firm. It is the most appropriate measure for shareholders who want to know how much profit a firm is making on their entire investment in the firm. It gives an idea of how efficiently the company is using shareholders' investment to generate profit.

If Shareholders Want to Know How Much Profit a Firm