Question

(net income - preferred dividends) / average common stockholders' equity. (Common stockholders' equity is equal to total stockholders' equity minus any equity from preferred stock.)

Answer 1

The subject of this question is Business, specifically relating to financial analysis and the calculation of Return on Common Equity.

Step-by-step explanation:

The subject of this question falls under the category of Business. Specifically, it relates to financial analysis and calculation of a ratio called Return on Common Equity.

Return on Common Equity is a financial ratio used to measure the profitability of a company from the perspective of its common stockholders. The formula for calculating this ratio is: (Net Income - Preferred Dividends) / Average Common Stockholders' Equity.

To calculate it, you need to subtract the preferred dividends from the net income of the company and then divide it by the average common stockholders' equity. The common stockholders' equity is the total stockholders' equity minus any equity related to preferred stock.