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