Net income available to stockholders is Rs 125 and total assets are Rs 1,096 then return on common equity would be
A. 0.11%
B. 11.40%
C. 0.12 times
D. 12.00%
Answer: Option B
Solution (By Examveda Team)
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 ℅
This Question Belongs to Commerce >> Financial Management
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