The return on common stockholders' equity is computed by dividing net income
A)by ending common stockholders' equity.
B)by average common stockholders' equity.
C)less preferred dividends by ending common stockholders' equity.
D)less preferred dividends by average common stockholders' equity.

Question

Quizplus · Accepted Answer

The return on common stockholders' equity is calculated by dividing net income minus preferred dividends by the average common stockholders' equity. This measures the profitability relative to the equity held by common shareholders.

The Return on Common Stockholders' Equity Is Computed by Dividing