The Numerator of the Return on Common Stockholders' Equity Is

question 161

Multiple Choice

The numerator of the return on common stockholders' equity is

• A) net income
• B) net income minus preferred dividends
• C) income before income tax
• D) operating income minus interest expense

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Definitions:

Market Price

The price at which a good or service is offered in the marketplace.

Short-Run Supply Curve

A graphical representation showing the relationship between the price of a good and the quantity supplied over a short period, when some production variables are fixed.

Marginal Cost Curve

A visual chart that illustrates the change in the expense associated with producing an extra unit of a product as the total output grows.

Average Variable Cost

The total variable costs divided by the quantity of output produced, reflecting the average cost of producing each unit excluding fixed costs.