The Rate of Return on Common Shareholders' Equity Is Calculated

question 37

True/False

The rate of return on common shareholders' equity is calculated by dividing net income less preferred dividends by average common shareholders' equity.

---

Definitions:

Journal Entries

Records of financial transactions in the accounting system, marked by debits and credits to maintain the balance of accounts.

Stock Securities

Equities or shares in corporations, representing a fraction of ownership in the company; these can provide dividends and potential appreciation in value to its holders.

Long-Term Investment

Investments in securities or other assets that are intended to be held for several years or more.

Cash Dividends

Payments made by a corporation to its shareholders as a distribution of profits, typically in cash form, reflecting the company's profitability.