The ultimate test of a firm's efficient use of its stockholders money is its return on equity.

Question

Quizplus · Accepted Answer

Return on equity (ROE) measures the amount of profit a company generates from each unit of shareholder equity. It is a key measure of a firm's efficiency in utilizing the resources provided by its shareholders. A higher ROE indicates that the company is generating more profits relative to the amount of equity invested by shareholders, which is a positive sign for investors. Hence, the given statement is true, and the ultimate test of a firm's efficient use of its stockholders' money is its return on equity.

The Ultimate Test of a Firm's Efficient Use of Its