Which of the following is calculated by dividing net income by average total stockholders' equity?
A)Return on assets ratio.
B)Return on equity ratio.
C)Earnings per share.
D)Net profit margin ratio.

Question

Quizplus · Accepted Answer

Return on equity ratio is the ratio that is calculated by dividing net income by average total stockholders' equity, therefore option B is the correct choice. The other options are calculated differently: Return on assets ratio is calculated by dividing net income by average total assets, earnings per share is calculated by dividing net income by the number of outstanding shares, and net profit margin ratio is calculated by dividing net income by total revenue.

Which of the Following Is Calculated by Dividing Net Income