Respuesta :
Option A. is accurate, as employing debt will reduce a firm's ROE if the rate of interest is larger than the ROA.
What distinguishes ROA from ROE?
Two important metrics to assess a company's profitability are rate of return (ROE) and returns on assets (ROA). The primary difference between the two would be that ROA considers leverage and debt, whereas ROE does not. By dividing ROA even by equity multiplier, ROE may be determined.
What is preferable, ROA or ROE?
The best metric to use to assess a company's financial performance is ROA. Respectable earnings are being produced thanks to improved ROE, better ROA, and manageable debt. Lower ROA and higher ROE can lead to confusion.
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