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Return on Equity

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Return on Equity

  • This topic has 3 replies, 2 voices, and was last updated 4 years ago by AvatarJohn Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • August 22, 2021 at 5:37 pm #632565
    Avataralia99
    Member
    • Topics: 7
    • Replies: 2
    • ☆

    hi

    Are reserves included in equity figure to calculate the return on equity or just equity/ordinary shares?

    August 23, 2021 at 6:18 am #632586
    AvatarJohn Moffat
    Keymaster
    • Topics: 57
    • Replies: 54838
    • ☆☆☆☆☆

    If using book values, then equity is the share capital plus reserves.

    If using market values (which is more sensible and more likely) then reserves are not included (the market value effectively already takes into account the reserves, as I explain in my free lectures.)

    August 24, 2021 at 1:45 pm #632745
    Avataralia99
    Member
    • Topics: 7
    • Replies: 2
    • ☆

    thank you

    August 24, 2021 at 3:17 pm #632760
    AvatarJohn Moffat
    Keymaster
    • Topics: 57
    • Replies: 54838
    • ☆☆☆☆☆

    You are welcome 🙂

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    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • The topic ‘Return on Equity’ is closed to new replies.

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