Over the last 20 years, increases in the return on equity for the S&P Index have been associated with decreases in return of assets.

Question

Quizplus · Accepted Answer

Increases in the return on equity (ROE) for the S&P Index do not necessarily correlate with decreases in return on assets (ROA). ROE measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested, while ROA indicates how efficient a company is at using its assets to generate earnings. Both can increase simultaneously if a company is growing profits and efficiently using its assets.

Over the Last 20 Years, Increases in the Return on Equity