The rate of return on common stock equity is calculated by dividing
A) net income less preferred dividends by average common stockholders' equity.
B) net income by average common stockholders' equity.
C) net income less preferred dividends by ending common stockholders' equity.
D) net income by ending common stockholders' equity.

Question

Quizplus · Accepted Answer

The rate of return on common stock equity is calculated by dividing net income less preferred dividends by average common stockholders' equity. This measures the return that common stockholders are earning on their investment.

The Rate of Return on Common Stock Equity Is Calculated