ROE is computed as:
A) Net income attributable to controlling interest / Average equity attributable to controlling interest
B) Net income attributable to controlling interest / Net sales
C) [RNOA + (FLEV × Spread)] x NCI ratio
D) A and B
E) A and C

Question

Quizplus · Accepted Answer

ROE, or Return on Equity, is calculated as net income attributable to controlling interest divided by average equity attributable to controlling interest, which is option A. Option C, which involves the formula [RNOA + (FLEV × Spread)] x NCI ratio, is a more complex and less common way to approach ROE, especially in specific financial analysis contexts. Therefore, both A and C are correct ways to compute ROE, depending on the level of detail and the specific financial analysis framework being applied. Option B is incorrect because it describes a profit margin (net income/net sales), not ROE.

ROE Is Computed As