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    Question

    Which ratio indicates how effectively management uses

    shareholdersтАЩ funds to generate profits?
    A Current ratio Correct Answer Incorrect Answer
    B Return on equity (ROE) Correct Answer Incorrect Answer
    C Quick ratio Correct Answer Incorrect Answer
    D Debt service coverage ratio Correct Answer Incorrect Answer
    E Inventory turnover ratio Correct Answer Incorrect Answer

    Solution

    ROE = Net income / ShareholdersтАЩ equity тАФ measures return to owners.

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