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sasham
Apr 28, 2009, 06:57 PM
please let me know if I'm right

common stock $600
additional paid-in capital $250
retained earnings $370
net income for year $240
I need "return on common stockholder's equity"=net income/stock equity=240/600=0.4
morgaine300
Apr 28, 2009, 10:38 PM
"Common stockholder's equity" does not mean stock only. Equity means the entire net worth, like in your accounting equation.

When it's common stockholder's equity, that means the part that doesn't go to the preferred shareholders, which in this case doesn't exist, so all equity belongs to common.
sasham
Apr 30, 2009, 07:47 PM
took my test.
answer 0.4 is not right
I don't understand then...
morgaine300
Apr 30, 2009, 11:30 PM
No, it's not .4. That's because you only included the stock. Equity isn't just stock. It's the entire equity of $1220.