Return on equity is a ratio that:
A)is calculated by dividing profit plus preferred dividends by average common shareholders' equity.
B)cannot be calculated if the company has preferred shares in addition to common shares.
C)is calculated by dividing profit plus preferred dividends by average common shareholders' equity and shows the relationship between profit available for common shareholders and average common shareholders' equity.
D)shows the relationship between profit available for common shareholders and average common shareholders' equity.

Question

Quizplus · Accepted Answer

Return on equity (ROE) is calculated by dividing net income available to common shareholders by average common shareholders' equity, showing the relationship between profit available for common shareholders and their equity.

Return on Equity Is a Ratio That