Which of the following directly impact return on equity?
I. net profit margin
II. leverage
III. return on assets
IV. cash flow from investment activities
A) I and III only
B) II and IV only
C) I, II and IV only
D) I, II and III only

Question

Quizplus · Accepted Answer

Return on Equity (ROE) is directly impacted by net profit margin (affects profitability), leverage (affects the amount of debt used to finance assets), and return on assets (affects how efficiently assets are used to generate profit). Cash flow from investment activities does not directly impact ROE but rather the firm's investment decisions and liquidity.

Which of the Following Directly Impact Return on Equity