The return on equity ratio usually is computed as:
A)Net income divided by average total assets.
B)Net income divided by average total stockholders' equity.
C)Gross profit divided by average total stockholders' equity.
D)Net income less preferred dividends,divided by average common stockholders' equity.

Question

Quizplus · Accepted Answer

The return on equity (ROE) ratio is calculated by dividing net income by average total stockholders' equity, which measures a company's profitability relative to equity.

The Return on Equity Ratio Usually Is Computed As