The most popular yardstick of financial performance among investors and senior managers is the:
A) profit margin.
B) return on equity.
C) return on assets.
D) times-burden-covered ratio.
E) earnings yield.

Question

Quizplus · Accepted Answer

Return on equity (ROE) is a widely used measure of financial performance that indicates how well a company is generating profits from the shareholders' investments. It is calculated by dividing net income by shareholder's equity. ROE is preferred by investors and senior managers because it shows how efficiently a company is using its equity to generate profits. Companies with higher ROE are considered to be more profitable and attractive to investors.

The Most Popular Yardstick of Financial Performance Among Investors and Senior