Question

The ________ measures the return on owners' (both preferred and common stockholders) investment in the firm.

A) net profit margin
B) price/earnings ratio
C) return on equity
D) return on total assets

Answer 1

C) return on equity

Step-by-step explanation:

The return on equity determines the financial performance of the company. It could be calculated by dividing the net income from the owners equity as according to the accounting equation, the owners equity could be find out by deducting the liabilities from the assets

So here the equity could be of both types i.e. common and preferred

Therefore the option c is correct