My Learning Cart
?
Categories
Account

What does a negative return on equity (ROE) signify?

₹0.0
Login to Download
  • 📥 Instant PDF Download
  • ♾ Lifetime Access
  • 🛡 Secure & Original Content

What’s inside this PDF?

Question: What does a negative return on equity (ROE) signify?

Options:

  1. Company is profitable
  2. Company is incurring losses
  3. Company has high debt
  4. Company has high liquidity

Correct Answer: Company is incurring losses

Solution: 

A negative return on equity (ROE) signifies that the company is incurring losses, as it indicates that net income is negative relative to shareholders\' equity.

What does a negative return on equity (ROE) signify?

Practice Questions

Q1
What does a negative return on equity (ROE) signify?
  1. Company is profitable
  2. Company is incurring losses
  3. Company has high debt
  4. Company has high liquidity

Questions & Step-by-Step Solutions

What does a negative return on equity (ROE) signify?
  • Step 1: Understand Return on Equity (ROE) - It shows how well a company uses shareholders' money to make profits.
  • Step 2: Know What Negative Net Income Means - It means the company is losing money.
  • Step 3: Connect Negative Net Income to ROE - Negative net income results in a negative ROE.
  • Step 4: Interpret the Negative ROE - It indicates the company is not generating profits and is incurring losses.
  • Return on Equity (ROE) – ROE is a financial metric that measures a company's profitability relative to shareholders' equity, indicating how effectively management is using equity to generate profits.
Soulshift Feedback ×

On a scale of 0–10, how likely are you to recommend The Soulshift Academy?

Not likely Very likely
Home Practice Performance eBooks