Chapter 13, Problem 13.38E

To determine

Rate of 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:

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

To Compute: the rate of return on common stockholders’ equity for 2018 for Company L.