Consider the following statements regarding the comparative characteristics of Return on Assets (ROA) and Return on Equity (ROE): Statement 1: Return on Assets (ROA) evaluates the operational efficiency of management in deploying assets to generate profit, functioning independently of how those assets are financed. Statement 2: Return on Equity (ROE) is specifically focused on the returns generated for equity holders and is heavily influenced by the firm's capital structure and financial leverage. Choose the correct option:

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Both statements are true.

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Answer 1

Both statements are true.

Answer 2

Both statements are false.

Answer 3

Statement 1 is true, but Statement 2 is false.

Answer 4

Statement 1 is false, but Statement 2 is true.

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