A company has an ROE of 8%. What does this suggest about its financial performance compared to a company with an ROE of 15%?

• A. The company with 8% ROE pays higher dividends.
• B. The company with 8% ROE is less efficient in using equity to generate profits.
• C. The company with 8% ROE has more assets.
• D. The company with 8% ROE has higher debt levels.

Answer: (B)