Craston Company's net income last year was $70,000. The company paid preferred dividends of $10,000 and its average common stockholders' equity was $480,000. The company's return on common stockholders' equity for the year was closest to:
A) 12.5%
B) 14.6%
C) 16.7%
D) 2.1%

Question

Quizplus · Accepted Answer

Return on common stockholders' equity is calculated as (Net Income - Preferred Dividends) / Average Common Stockholders' Equity. Here, it is ($70,000 - $10,000) / $480,000 = 12.5%.

Craston Company's Net Income Last Year Was $70,000