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Which of the following increased ROE?

A- increase equity B- decrease equity C- decrease income D- all answers are false

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Question added by Ahmed kandil , Cost Controller , Battour Holding Cpompany
Date Posted: 2015/04/13
Riaz Ahammed
by Riaz Ahammed , Financial Accountant , UTC Climate Controls & Security

Return on Equity is calculated by the following formula

ROE = Net Income / Shareholders equity.

Assuming that the Net Income remains constant, then any decrease in Equity will increase the Return on Equity. Therefore the answer is B - decrease in equity will increase ROE.

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