Return on equity (ROE) primarily measures which of the following?
A) The ability to earn profit for the common shareholders
B) The ability to earn profit for the preferred shareholders
C) The ability to generate revenue while holding assets steady
D) The ability to generate sufficient profit on total assets

Question

Quizplus · Accepted Answer

Return on equity (ROE) measures a company's ability to earn profit for the common shareholders. It is calculated by dividing net income by average shareholders' equity. ROE is an important metric for investors to consider as it indicates how efficiently a company is using its equity to generate profit.

Return on Equity (ROE) Primarily Measures Which of the Following