Question

net income available to stockholders rs 125 and total assets rs 1,096 then return on common equity is

Answer 1

Net income available to stockholders = 125

Total assets = 1,096

Return on common equity rate shows the net income earned per every rupee invested.It acts as a yardstick of profitability.

Return on common equity

= (net income - preferential stock)/Average common stock holder's equity

No further information is available

= (125/1096)×100

= 11.4051 ℅