The numerator of the rate earned on common stockholders' equity ratio is
A) net income
B) net income minus preferred dividends
C) income before income tax
D) operating income minus interest expense

Question

Quizplus · Accepted Answer

The numerator of the rate earned on common stockholders' equity ratio is the net income minus preferred dividends because this ratio only considers the earnings available to common stockholders after preferred dividends have been paid.

The Numerator of the Rate Earned on Common Stockholders' Equity