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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Return on Equity
hi
Are reserves included in equity figure to calculate the return on equity or just equity/ordinary shares?
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.)
thank you
You are welcome 🙂
