Rate of return on common stockholders' equity shows how much income is earned for each $1 invested by the common shareholders.

Name: Rate of return on common stockholders' equity shows how much income is earned for each $1 invested by the common shareholders.
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Question

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The rate of return on common stockholders' equity is calculated by dividing net income minus preferred dividends by the average common stockholders' equity. This ratio shows how much profit is generated per dollar invested by common shareholders.

Rate of Return on Common Stockholders' Equity Shows How Much