In 2016, the improvement in ABC's return on equity occurred because [blank].
A)ABC used more debt than in 1994
B)ABC lowered its expenses in 1995 and was, therefore, more profitable
C)ABC utilised its total assets more efficiently in 1995
D)there is no explanation for ABC's return on equity

Question

Quizplus · Accepted Answer

ABC's return on equity improved because it used more debt, which typically increases financial leverage and can enhance return on equity if the cost of debt is lower than the return on assets.

In 2016, the Improvement in ABC's Return on Equity Occurred