Question

The ______________________ helps the analyst see how the firm's decisions and activities over the course of an accounting period interact to produce an overall return to the firm's shareholders, the return on equity.

Answer 1

The return on equity helps the analyst see how the firm's decisions and activities over an accounting period interact to produce an overall return to the firm's shareholders.

Step-by-step explanation:

In the context of a firm's decisions and activities, the return on equity is a key metric that measures the overall return to the firm's shareholders. It helps the analyst understand how the firm's decisions and activities during an accounting period interact to produce this return. Return on equity is calculated by dividing the net income of the firm by its shareholders' equity and is expressed as a percentage.

For example, if a firm has a net income of $100,000 and shareholders' equity of $1,000,000, the return on equity would be 10% ($100,000/$1,000,000).