What is the rate of return on common stockholders' equity if net income is $22,700,sales are $100,000,and common stockholders' equity is $86,000?
A)22.7%
B)26.4%
C)86%
D)None of these answers are correct.

Question

Quizplus · Accepted Answer

The formula for calculating the rate of return on common stockholders' equity is:

Net Income / Common Stockholders' Equity

= $22,700 / $86,000

= 0.2637 or 26.37%

Rounding to one decimal place gives us 26.4%. Therefore, the answer is choice B (26.4%).

What Is the Rate of Return on Common Stockholders' Equity