One of Warren Buffett's acquisition criteria is to invest in businesses earning good return on equity. The
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One of Warren Buffett's acquisition criteria is to invest in businesses "earning good return on equity." The return on equity (ROE) formula uses both net income and stockholders' equity. Why is it important to relate net income to stockholders' equity? Why isn't it sufficient to merely concentrate on companies with the highest net income?
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Answer Relating net income to stockholders equity through the return on equity ROE ratio provides valuable insights into a companys profitability and ...View the full answer
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Related Book For 
Financial And Managerial Accounting For MBAs
ISBN: 9781618533593
6th Edition
Authors: Peter D. Easton
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