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
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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
"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.
Took my test.
Answer 0.4 is not right
I don't understand then...
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.
Forgot to say "Thanks, got it :)"
Um, well, you're welcome. Better late than never, as they say. :-)
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