A Company Reports the Following Determine the a Rate Earned on Stockholders' Equity,and B Rate

question 172

Essay

A company reports the following:
$\begin{array}{|l|r|}\hline \text { Net income } & \$ 350,000 \\\hline \text { Preferred dividends } & 50,000 \\\hline \text { Average stockholders' equity } & 1,000,000 \\\hline \text { Average common stockholders' equity } & 800,000 \\\hline\end{array}$
Determine the a rate earned on stockholders' equity,and b rate earned on common stockholders' equity . Round to one decimal place.

---

Definitions:

Commercial Division

A segment within a company that is focused on the selling and distribution of goods or services.

Fixed Expenses

Costs that do not change with the level of production or sales over a certain period, such as rent or salaries.

Variable Costing

An approach in accounting that takes into account only the variable aspects of production costs (such as direct materials, direct labor, and variable manufacturing overhead) in the computation of product prices.

Net Operating Income

Net Operating Income is a measure of a company's profitability from its regular business operations, excluding income and expenses from interest, taxes, and other non-operational activities.