Which of these ratios,or levers of performance,are the determinants of ROE?
I.profit margin
II.financial leverage
III.times interest earned
IV.asset turnover
A) I and IV only
B) II and IV only
C) I,II,and IV only
D) I,II,and III only
E) I,III,and IV only

Question

Quizplus · Accepted Answer

ROE (Return on Equity) is determined by three main factors: profit margin (how much profit is generated from sales), financial leverage (the use of borrowed funds to increase the return on equity), and asset turnover (how efficiently assets are used to generate sales). Times interest earned is a measure of a company's ability to meet its interest payments, which does not directly determine ROE.

Which of These Ratios,or Levers of Performance,are the Determinants of ROE