Finance Question

Which one of the following is a criticism of equating the goals of maximizing the ROE of a firm and maximizing the firm's shareholder wealth?

a) ROE is based on after-tax earnings, not cash flows.
b) ROE does not consider risk.
c) ROE ignores the size of the initial investment as well as future cash flows.
d) All of these are criticisms of ROE as a goal.

Asked Sep 04, 2012
This question doesn't make sense. The return on equity for a business is a entirely different thing than shareholder's wealth which could include assets of many other types from other sources. How can you "equate" them? They're "apples and oranges."
Answered Sep 04, 2012
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Answered Jul 26, 2019
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Answered Jul 30, 2019

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