Return on equity is calculated as net income divided by the sum of common and preferred equity.

Name: Return on equity is calculated as net income divided by the sum of common and preferred equity.
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Return on equity (ROE) is calculated as net income divided by shareholders' equity, which typically includes both common and preferred equity but does not involve adding them together in the denominator; it's the total equity.

Return on Equity Is Calculated as Net Income Divided by the Sum