- CFA Exams
- CFA Level I Exam
- Study Session 10. Equity Valuation (2)
- Reading 26. Industry and Company Analysis
- Subject 3. Balance sheet and cash flow statement modeling
CFA Practice Question
According to the authors, which ratio is the best measure of profitability?
B. Return on equity.
C. Return on assets.
A. Return on invested capital.
B. Return on equity.
C. Return on assets.
Correct Answer: A
The numerator of ROIC is pre-interest earnings. It is not affected by a company's degree of financial leverage.
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