The Formula for Computing the Rate of Return on Common

question 54

Multiple Choice

The formula for computing the rate of return on common stockholders' equity is

• A)(net income + interest expense)/ average total assets.
• B)(net income - preferred dividends)/ average common stockholders' equity.
• C)net income / net sales.
• D)(net income - preferred dividends)/ number of shares of outstanding common stock.

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Definitions:

United States

A country in North America consisting of 50 states and a federal district, known for its significant influence on world economics, politics, and culture.

Oil

A viscous liquid derived from petroleum, crude oil, or plants, used as fuel, in manufacturing, and as a base for many chemicals.

Consumption

The use of goods and services by households or individuals, often measured to understand economic activity and trends.