When computing the return on equity, retained earnings should be excluded from the average total stockholders' equity.

Name: When computing the return on equity, retained earnings should be excluded from the average total stockholders' equity.
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Retained earnings are included in the calculation of average total stockholders' equity when computing the return on equity, as they represent a portion of the company's equity that has been reinvested back into the business.

When Computing the Return on Equity, Retained Earnings Should Be