Which of the following firms would be expected to have a high ROE based on that firm's high profitability?
A)a grocery store chain that has very high turnover, selling many multiples of their assets per year
B)a brokerage firm that has high levels of leverage
C)a low-end retailer that has a low mark-up on all items it sells
D)a medical supply company that provides very precise instruments at a high price to large medical establishments such as hospitals

Question

Quizplus · Accepted Answer

A medical supply company that provides very precise instruments at a high price to large medical establishments such as hospitals would be expected to have a high Return on Equity (ROE) due to high profitability margins. High-priced, precise instruments likely have high profit margins, contributing to higher profitability and thus a higher ROE.

Which of the Following Firms Would Be Expected to Have