ITPEC IP April 2026 Question 68
ITPEC IP April 2026 — Question 68 of 100
Equity — ROE means Return on Equity.
ROE is commonly calculated as net income divided by shareholders' equity, usually using average equity for the period. It shows how effectively the company produces profit from the owners' invested capital.
Answer (d)
Why not others: (a) Earnings belongs in the numerator concept but is not the E in the acronym; (b) Employee and (c) Enterprise are unrelated expansions.
Key rule: ROE evaluates owners' capital; distinguish it from ROA, return on assets, and ROI, return on investment.
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