An increase in which of the following will increase the return on equity,all else constant?
I.sales
II.net income
III.depreciation
IV.total equity
A)I only
B)I and II only
C)II and IV only
D)II and III only
E)I, II, and III only

Question

Quizplus · Accepted Answer

The return on equity is calculated as net income divided by total equity, which means increasing sales and net income will result in a higher return on equity. Depreciation does not impact net income, and increasing total equity without an increase in net income would actually decrease the return on equity.

An Increase in Which of the Following Will Increase the Return