ROE and ROA Concepts

Return on Equity measures a company's leverage by revealing the amount of debt it carries

Return on Equity measures a company's profitability by revealing how much profit a company generates with the money shareholders have invested (correct)

Return on Equity measures a company's liquidity by revealing its ability to meet short-term obligations

Return on Equity measures a company's profitability by revealing how much profit a company generates with the money it has borrowed

ROA indicates the market value of a company's shares in relation to its earnings per share

ROA indicates how efficiently a company uses its assets to generate profit (correct)

ROA indicates the total debt of a company in relation to its total assets

ROA indicates the liquidity position of a company by comparing its current assets to current liabilities