The following selected data are for Geneva Company:
-Geneva Company's return on common stockholders' equity for Year 2 is closest to:
A)11%
B)12%
C)13%
D)6%

Question

The following selected data are for Geneva Company: 
-Geneva Company's return on common stockholders' equity for Year 2 is closest to:
A)11% 
B)12% 
C)13% 
D)6%

Quizplus · Accepted Answer

Return on common stockholders' equity
= (Net income - Preferred dividends)F1F1F1S1F1F1F10 Average common stockholders' equity
= ($110 - $12)F1F1F1S1F1F1F10 $825* = 12%
*Average common stockholders' equity = ($850 + $800)F1F1F1S1F1F1F10 2 = $825

The Following Selected Data Are for Geneva Company