Which of the following statements is true? I. The formula for the return on equity is: Return on equity = Net income ÷ Average total stockholders' equity. II. When computing the return on equity, retained earnings should be excluded from the average total stockholders' equity.
Which of the following statements is true? I. The formula for the return on equity is: Return on equity = Net income ÷ Average total stockholders' equity. II. When computing the return on equity, retained earnings should be excluded from the average total stockholders' equity.
Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter9: Metric-analysis Of Financial Statements
Section: Chapter Questions
Problem 12CDQ
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![Which of the following statements is true?
I. The formula for the return on equity is: Return on equity = Net income ÷ Average total stockholders' equity.
II. When computing the return on equity, retained earnings should be excluded from the average total
stockholders' equity.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb9ef959a-7b9b-4459-9095-0dd03d2a297b%2F061f165d-aece-42f5-b3be-71192148c18a%2F7ovusu_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Which of the following statements is true?
I. The formula for the return on equity is: Return on equity = Net income ÷ Average total stockholders' equity.
II. When computing the return on equity, retained earnings should be excluded from the average total
stockholders' equity.
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