Asked by Jordan Prather on Jul 05, 2024
Verified
In two successive years, it is possible for a firm to have identical profit and maintain identical levels of assets, but have different return on equity.
Return on Equity
A measure of a corporation's profitability relative to stockholders’ equity, indicating how effectively management uses investments to generate earnings growth.
- Use ratio analysis to appraise a company's leverage and its effect on financial performance.
- Acquire knowledge on the utilization of ratio analysis for the purpose of analyzing a firm's performance over chronological periods and against competitor benchmarks.
Verified Answer
JC
JKube CloudJul 09, 2024
Final Answer :
True
Explanation :
Return on equity is calculated as net income divided by equity. Net income can remain the same while different factors, such as changes in debt levels or stockholder equity, can lead to different levels of equity and thus different return on equity.
Learning Objectives
- Use ratio analysis to appraise a company's leverage and its effect on financial performance.
- Acquire knowledge on the utilization of ratio analysis for the purpose of analyzing a firm's performance over chronological periods and against competitor benchmarks.
Related questions
A Decrease in the Equity Multiplier Indicates That the Firm ...
Mahoe Corporation Has Provided the Following Financial Data: Dividends ...
The Average Collection Period Tells How Many Days It Takes ...
Debt Management Ratios Show the Extent to Which a Firm's ...
Casey Communications Recently Issued New Common Stock and Used the ...