Select the Incorrect Statement Regarding the Return on Equity (ROE)measure

Multiple Choice

Select the incorrect statement regarding the return on equity (ROE) measure.

A) ROE is used to measure the profitability of the firm in relation to the amount invested by stockholders.
B) A company's ROE is lower than its return on investment because ROE does not consider that part of the business that is financed by debt.
C) ROE is affected by a company's use of leverage.
D) ROE equals net income divided by total stockholders' equity.