Ferman Corporation Had Net Income of $140000 and Paid Dividends

question 241

Multiple Choice

Ferman Corporation had net income of $140000 and paid dividends of $40000 to common stockholders and $20000 to preferred stockholders in 2021.Ferman Corporation's common stockholders' equity at the beginning and end of 2021 was $870000 and $1130000 respectively.Ferman Corporation's return on common stockholders' equity was

• A)14%.
• B)12%.
• C)9%.
• D)8%.

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Definitions:

Treasury Stock

Refers to shares that were issued and later reacquired by the company. It is subtracted from total equity.

Voting Rights

The rights of shareholders to vote on company matters, typically exercised during a corporation's annual general meeting.

Dividends

Payments made by a corporation to its shareholder members, distributing a portion of the company's earnings.

Common Stock

Equity ownership in a corporation, representing a claim on its earnings and assets.