Which of the following, if true, strengthens the case that determining

QUESTION

Which of the following, if true, strengthens the case that determining the return on owners’ equity ratio would be helpful to Matheson?

A) Matheson wants to know how profitable its business is overall.
B) Matheson wants to know how well it is performing for its stockholders.
C) Matheson wants to know how efficiently it is using its assets.
D) Matheson wants to know the extent to which it uses debt to finance operations.
E) Matheson wants to know how well it is using its inventory.

ANSWER

Answer: B
Explanation: B) A return on owners’ equity ratio shows the rate of return on investment for the company’s stockholders. Choice A suggests a profitability ratio. Choice C suggests a return on assets ratio. Choice D suggests a debt to owners’ equity ratio. Choice E suggests an activity ratio.