Rate of return on common shareholders' equity (ROCE)
A)measures a firm's performance in using and financing assets to generate earnings and explicitly considers financing costs.
B)a measure of profitability that incorporates the results of operating, investing, and financing activities.
C)equals net income (less dividends on preferred stock, if any) divided by average common shareholders' equity.
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

The rate of return on common shareholders' equity (ROCE) is a measure of a firm's performance in using and financing assets to generate earnings and explicitly considers financing costs. It is a measure of profitability that incorporates the results of operating, investing, and financing activities. ROCE equals net income (less dividends on preferred stock, if any) divided by average common shareholders' equity. Therefore, all of the above statements are correct.

Rate of Return on Common Shareholders' Equity (ROCE)