Seeing is believing!
Before you order, simply sign up for a free user account and in seconds you'll be experiencing the best in CFA exam preparation.
Basic Question 0 of 16
Which of the following formulas is the formula for computing return on equity (ROE)?
B. Net income divided by equity
C. Sales divided by assets
A. Net income divided by assets
B. Net income divided by equity
C. Sales divided by assets
User Contributed Comments 7
| User | Comment |
|---|---|
| Gina | NI/A=ROI NI/E=ROE A/E=Fin.Leverage S/A=A Turnover |
| julescruis | thanks gina |
| godz | if you got this wrong dont show up at the exam center |
| Drzewes | GIna: NI/A is ROA ROI = NI/ Equity + total debt I am almost :) sure. |
| endlessfin1te | isn't Asset = Equity + Debt anyway? |
| johntan1979 | Look at the explanation given in the answer... the only way ROE > ROI is when the equity multiplier or leverage is > 1. In other words, ROI = NI/A = ROA |
| ldfrench | @godz, el oh el plz don't be mean (i mean it plz) |
You have a wonderful website and definitely should take some credit for your members' outstanding grades.
Colin Sampaleanu
Learning Outcome Statements
analyze disclosures relating to deferred tax items and the effective tax rate reconciliation and explain how information included in these disclosures affects a company's financial statements and financial ratios
CFA® 2025 Level I Curriculum, Volume 3, Module 9.