Question

An increase in which of the following will increase the return on equity, all else constant?

I. sales
II. net income
III. depreciation
IV. total equity

A. I only

B. I and II only

C. II and IV only

D. II and III only

E. I, II, and III only

Answer 1

An increase in sales and net income will increase the return on equity.

Step-by-step explanation:

The correct answer is B. I and II only. An increase in sales and net income will increase the return on equity, while an increase in depreciation and total equity will not necessarily result in an increase in return on equity.