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A company has a net loss for the year of $2 million (negative net income) and...

A company has a net loss for the year of $2 million (negative net income) and a deficit equity of $1 million (negative equity). ROE will be

-200% indicating that the company is in dire straits.

200% and meaningless.

-200% indicating that the company is doing well.

200% indicating an exceptional opportunity.
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Answer #1

ROE= (Net Income) / (Shareholders equity)

So here ROE=-2/-1= 200%, which mean company is in dire straits.

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