One important difference between return on assets (ROA)and return on common shareholder's equity (ROCE)is that:
A) ROA does not differentiate based on how a company finances its assets; ROCE does.
B) ROA does not distinguish between the different types of income items, such as income from continuing operations, discontinued operations, extraordinary items and changes in accounting principles; ROCE does.
C) ROCE does not distinguish between the different types of income items, such as income from continuing operations, discontinued operations, extraordinary items and changes in accounting principles; ROA does.
D) ROCE does not differentiate based on how a company finances its assets; ROA does.

Question

Quizplus · Accepted Answer

ROA measures profitability relative to total assets without considering how those assets are financed, while ROCE focuses on profitability relative to equity, thus considering the financing structure.

One Important Difference Between Return on Assets (ROA)and Return on Common