Return on equity is net income minus taxes divided by ______.Multiple choice question.current liabilitiesnet salescommon stock outstandingtotal owners' equity
Question
Return on equity is net income minus taxes divided by ______.Multiple choice question.current liabilitiesnet salescommon stock outstandingtotal owners' equity
Solution
The answer is total owners' equity. Return on equity (ROE) is a measure of financial performance calculated by dividing net income by shareholders' equity. Because shareholders' equity is equal to a company’s assets minus its debt, ROE could be thought of as the return on net assets.
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