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Return on common stockholders' equity measures the amount of net income earned for its owners. it is computed by taking net income divided by average total equity.

What is the return on common stockholders' equity?

  • The amount of net income earned for its owners is measured by the return on common stockholders' equity.
  • The return on common stockholders' equity ratio assesses a company's ability to generate income for the benefit of common stockholders.
  • It is calculated by dividing the net income available to common stockholders by the equity of common stockholders.
  • Return on common stockholders' equity, also known as ROE, stands for Return on equity ratio and measures a firm's or company's ability to generate profits from shareholders' investments in the company.
  • The debt to assets ratio, on the other hand, measures the percentage of the firm's or company's aggregate assets that were financed by creditors.

Therefore, the return on common stockholders' equity measures the amount of net income earned by its owners. it is computed by taking net income divided by average total equity.

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