The 2019 balance sheet for Standard Electronics reported the following items — with 2018 figures given for comparison:
Net income for 2019 was $25,000. Compute the rate of return on common stockholders' equity for 2019. (Round your final answer to two decimal places.)
A) 4.38%
B) 10.37%
C) 11.09%
D) 4.69%
C) 11.09%
Explanation: Rate of return on common stockholders' equity:
(Net income - Preferred dividends) / Average common stockholders' equity
($25,000 - 0) / ($241,000 + $210,000) / 2
$25,000 / $225,500 = 11.09%
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