Explaining why the ROE (return on equity)ratio has changed requires an examination of the:
A) asset efficiency ratios and debt ratios.
B) profitability ratios and the market performance ratios.
C) return on assets and financial risk.
D) profitability ratios and the asset efficiency ratios.

Question

Quizplus · Accepted Answer

ROE is influenced by the company's return on assets (ROA) and its financial leverage (debt levels). ROA shows how efficiently a company can earn a return on its investment in assets, while financial risk is associated with the company's use of debt, which affects equity returns.

Explaining Why the ROE (Return on Equity)ratio Has Changed Requires