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The Formula for Return on Common Stockholders' Equity Is Net

question 153

True/False

The formula for return on common stockholders' equity is Net sales revenue minus preferred dividends divided by average common stockholders' equity.


Definitions:

Cash Flow To Creditors

The amount of cash companies pay to their creditors and lenders, including payments for interest and principal on debt.

Cash Flow To Shareholders

Dividends paid out by a firm less net new equity raised.

Capital Gains

The profit that results from a sale of a capital asset, such as stock, bond, or real estate, where the sale price exceeds the purchase price.

Eligible Dividends

Dividends that are qualified for preferential tax treatment under certain tax laws.

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