Return on common stockholders' equity is calculated as: A) net income ÷ weighted average common shares outstanding. B) (net income - preferred dividends) ÷ average common stockholders' equity. C) weighted average common shares outstanding ÷ net income. D) average common stockholders' equity ÷ (net income - preferred dividends). E) operating income ÷ average common stockholders' equity.

Question

Quizplus · Accepted Answer

Return on common stockholders' equity is calculated by subtracting preferred dividends from net income and then dividing the result by the average common stockholders' equity. This measures the profitability of a company from the common shareholders' perspective.

Return on Common Stockholders' Equity Is Calculated As