The return on common shareholders' equity ratio is affected by the
A)gross profit margin and profit margin ratio.
B)profit margin and free cash flow.
C)times interest earned and debt to total assets ratios.
D)return on assets and debt to total assets ratios.

Question

Quizplus · Accepted Answer

The return on common shareholders' equity ratio is influenced by the return on assets (ROA) and the debt to total assets ratios. ROA affects how efficiently a company uses its assets to generate profit, which directly impacts shareholders' equity. The debt to total assets ratio affects the financial leverage of a company, which can amplify the return on equity for shareholders.

The Return on Common Shareholders' Equity Ratio Is Affected by the