GK
ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Current assets
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Current liabilities
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Equity capital
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Total capital
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Detailed explanation-1: -To calculate ROE, analysts simply divide the company’s net income by its average shareholders’ equity. Because shareholders’ equity is equal to assets minus liabilities, ROE is essentially a measure of the return generated on the net assets of the company.
Detailed explanation-2: -Return on equity (ROE) is a financial ratio that shows how well a company is managing the capital that shareholders have invested in it. To calculate ROE, one would divide net income by shareholder equity.
Detailed explanation-3: -Return on equity = Net income / Average shareholder’s equity. Here, net income is computed before dividends are allocated to the common shareholders. Further, it is calculated after dividends are paid out to preferred shareholders, and interest is paid to lenders.
Detailed explanation-4: -The net profit of a company before interest and tax is known as operating profit, income from operations and earnings before interest and taxes. Operating Profit Ratio = Operating Profit / Sales x 100. Was this answer helpful?