Net income available to stockholders is Rs 150 and total assets are Rs 2,100 then return on total assets would be
A. 0.07%
B. 7.14%
C. 0.05 times
D. 7.15 times
Answer: Option B
Solution (By Examveda Team)
Net income available to stockholders = 150
Total assets = 2100
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
= (150/2100)×100
= 7.14%
This Question Belongs to Commerce >> Financial Management
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