Question

In most instances, _____________________________ is the most important accounting indication of management's success in accomplishing the shareholders' valuation objective.

a.   Return on Equity (ROE)

b.   Return on Assets (ROA)

c.   Return on Investment (ROI)

d.   Stock Price

e.   Both b and c

Answer 1

In Most cases, return on equity is most important accounting indication of determination of Management success in accomplishing the shareholders valuation objective because return on equity should be helpful in order to find out the return which has been produced by managers to the shareholders and shareholders will only be looking after their overall returns rather than looking after the return of the company, So shareholders valuation would be giving the most priority to the return on the equity method.

Correct answer will be option (A) return on equity.