Match the ratio that goes with each formula.
-$\frac {\text {Net Income Before Nonrecurring Items
Preferred Dividends }} { \text {Average Common Equity} }$

A)net profit margin
B)total asset turnover
C)return on assets
D)DuPont return on assets
E)operating income margin
F)operating asset turnover
G)return on operating assets
H)DuPont return on operating assets
I)sales to fixed assets
J)return on investment
K)return on total equity
L)return on common equity
M)gross profit margin

Question

Match the ratio that goes with each formula.
-$\frac {\text {Net Income Before Nonrecurring Items
Preferred Dividends  }} { \text {Average Common Equity} }$

A)net profit margin
B)total asset turnover
C)return on assets
D)DuPont return on assets
E)operating income margin
F)operating asset turnover
G)return on operating assets
H)DuPont return on operating assets
I)sales to fixed assets
J)return on investment
K)return on total equity
L)return on common equity
M)gross profit margin

Quizplus · Accepted Answer

This formula calculates the Return on Common Equity (ROCE), which measures a company's profitability by revealing how much profit it generates with the money shareholders have invested, excluding preferred dividends and focusing on common equity.