ITPEC IP October 2021 Question 72
ITPEC IP October 2021 — Question 72 of 100
The E in ROE stands for equity. Return on equity measures how much profit a company earns relative to shareholders' equity and is commonly calculated as net income divided by average equity.
Answer (d)
Why not others:
- earnings are represented by the return or profit in the numerator, not by E in the acronym
- employee and enterprise are not the denominator used by this profitability ratio
Key rule: ROE means Return on Equity and evaluates the efficiency with which a company generates profit from shareholders' invested capital.
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