A. high return on equity
B. high return on assets
C. low return on assets
D. low return on equity
Answer: Option B
This Question Belongs to Commerce >> Financial Management
Investment is the _______________.
A. net additions made to the nation’s capital stocks
B. person’s commitment to buy a flat or house
C. employment of funds on assets to earn returns
D. employment of funds on goods and services that are used in production process
Financial Management is mainly concerned with ______________.
A. All aspects of acquiring and utilizing financial resources for firms activities
B. Arrangement of funds
C. Efficient Management of every business
D. Profit maximization
The primary goal of the financial management is ____________.
A. to maximize the return
B. to minimize the risk
C. to maximize the wealth of owners
D. to maximize profit
In his traditional role the finance manager is responsible for ___________.
A. proper utilisation of funds
B. arrangement of financial resources
C. acquiring capital assets of the organization
D. efficient management of capital
Low earning power means the company is not generating strong profits.
High interest costs mean a large portion of earnings is being used to pay debt interest.
These two factors reduce net income, which in turn reduces Return on Equity (ROE).
ROE = Net Income / Shareholder's Equity
So when net income is low, ROE becomes low.