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    bucklegirl's Avatar
    bucklegirl Posts: 1, Reputation: 1
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    #1

    Aug 7, 2014, 08:08 PM
    How do I figure return on common stockholders equity?
    Ryan
    Company
    Priest
    Company
    Ryan
    Company
    Priest
    Company
    Data from the current year-end balance sheets Data from the current year’s income statement
    Assets Sales $ 780,000 $ 883,200
    Cash $ 21,000 $ 31,000 Cost of goods sold 594,100 644,500
    Accounts receivable, net 33,400 55,400 Interest expense 9,300 13,000
    Current notes receivable (trade) 10,000 8,400 Income tax expense 14,992 24,383
    Merchandise inventory 84,340 142,500 Net income 161,608 201,317
    Prepaid expenses 5,500 7,350 Basic earnings per share 4.49 5.14
    Plant assets, net 320,000 312,400




    Total assets $ 474,240 $ 557,050








    Beginning-of-year balance sheet data
    Liabilities and Equity Accounts receivable, net $ 30,800 $ 55,200
    Current liabilities $ 69,340 $ 100,300 Current notes receivable (trade) 0 0
    Long-term notes payable 83,800 113,000 Merchandise inventory 61,600 111,400
    Common stock, $5 par value 180,000 196,000 Total assets 438,000 372,500
    Retained earnings 141,100 147,750 Common stock, $5 par value 195,000 200,000




    Total liabilities and equity $ 474,240 $ 557,050 Retained earnings 115,300 94,600








    pready's Avatar
    pready Posts: 3,197, Reputation: 207
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    #2

    Aug 8, 2014, 06:22 AM
    The formula for Return on Common Equity is:

    Return on Common Equity = (Net Income - Preferred Stock Dividends) / Common Stockholders Equity


    Note: Return on Common Equity is expressed as a percentage, so you need to take your answer times 100 to get your percentage.

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