Return on equity computations are used in evaluating:
A)Liquidity.
B)Profitability.
C)Gross profit.
D)Whether a ratio is improving or deteriorating over time.

Question

Quizplus · Accepted Answer

Return on equity (ROE) is a profitability ratio that measures the amount of net income returned as a percentage of shareholders equity. Therefore, ROE computations are primarily used in evaluating the profitability of a company.

Return on Equity Computations Are Used in Evaluating