Return on Equity Is a Ratio That

question 49

Multiple Choice

Return on equity is a ratio that:

• A) is calculated by dividing net income plus preferred dividends by average common shareholders' equity
• B) shows the relationship between net income available for common shareholders and average common shareholders' equity
• C) cannot be calculated if the company has preferred shares in addition to common shares
• D) is calculated by dividing net income plus preferred dividends by average common shareholders' equity and shows the relationship between net income available for common shareholders and average common shareholders' equity

Understand the concept and measurement of income inequality.

Describe the Lorenz Curve and its implications for income distribution.

Grasp the significance of the Gini coefficient in quantifying income inequality.

Analyze changes in income distribution over time and their socio-economic implications.

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Definitions:

Depletion Expense

An accounting and taxation method that allocates the cost of extracting natural resources, such as timber, minerals, and oil from the earth, over their extraction period.

Operating Expense

Ongoing costs for running a product, business, or system, excluding costs directly associated with producing goods or services.

Legal Life

The duration of time that an asset is legally permitted to be utilized, or the period during which a patent or copyright is protected under law.

Useful Life

The estimated period over which an asset is expected to be used before it is considered no longer useful by the owner.