Chaney Inc.wants to measure the relationship between profitability and the investment made by stockholders.Chaney should use
A) return on common stockholders' equity.
B) earnings per share.
C) return on sales.
D) the statement of retained earnings.

Question

Quizplus · Accepted Answer

Return on common stockholders' equity measures a company's ability to generate profits from the investment made by its common stockholders. It is a ratio that shows how much profit the company has generated for every dollar of common stockholder's equity. This ratio provides a good measure of the relationship between profitability and the investment made by stockholders as it directly relates to the profits earned by the company from the funds invested by the stockholders.