The 2017 balance for Mason Electronics reported the following items

Question

The 2017 balance for Mason Electronics reported the following items - with 2016 figures given for comparison:

Net income for 2016 was $20,000.Compute the rate of return on common stockholders' equity for 2016.(Round your final answer to two decimal places. )

Quizplus · Accepted Answer

C)Rate of return on common stockholders' equity:
(Net income - Preferred dividends)/ Average common stockholders' equity
($20,000 - 0)/ ($246,000 + $206,000)/ 2
$20,000 / $226,000 = 8.85%