Which of the following statements is incorrect?
A) The equity multiplier is equal to 1 plus the debt-equity ratio.
B) Return on equity is equal to the return on assets multiplied by the equity multiplier.
C) Return on equity is equal to total equity divided by net income.
D) Return on equity is equal to the equity multiplier multiplied by the total asset turnover multiplied by the proﬁt margin.
E) The difference between the asset multiplier and liability multiplier equals the equity multiplier.

Question

Quizplus · Accepted Answer

The Answer of Which of the following statements is incorrect?
A) The equity multiplier is equal to 1 plus the debt-equity ratio.
B) Return on equity is equal to the return on assets multiplied by the equity multiplier.
C) Return on equity is equal to total equity divided by net income.
D) Return on equity is equal to the equity multiplier multiplied by the total asset turnover multiplied by the proﬁt margin.
E) The difference between the asset multiplier and liability multiplier equals the equity multiplier.

Which of the Following Statements Is Incorrect