During 2019, Leon, Inc.'s net income was $700,000. Its common stockholders' equity was $1,080,000 at January 1, 2019 and $1,720,000 at December 31, 2019. During 2019, Leon had 10,000 outstanding shares of 6%, $100 par value cumulative preferred stock. During December 2019, Leon's board of directors declared the annual preferred stock dividend and a $120,000 common stock dividend.
What is Leon's 2019 return on common stockholders' equity?

Question

Quizplus · Accepted Answer

[$700,000 - (6% x $1,000,000)] / [($1,080,000 + $1,720,000) / 2] = 45.7%