Chapter 11, Problem 11.8DIR

(a)

To determine

Return on common stockholders’ equity ratio: It is a profitability ratio that measures the profit generating ability of the company from the invested money of the shareholders. The formula to calculate the return on common stockholders’ equity is as follows:

$\begin{array}{l}\text{Return on common}\\ \text{stockholders' equity}\end{array}\}=\frac{\text{Net income–Preferred dividends}}{\text{Average common stockholders' equity}}\times 100$

(a)

To Compute: the return on common stockholders’ equity for the Corporation V for the year 2014 and 2015.

(b)

To determine

To discuss: the changes in return on stockholder’s equity in each year.