Chapter 18, Problem 18.24E

(1)

To determine

Rate of return on stockholder’s equity: Rate of return on stockholders’ equity is used to determine the relationship between the net income available for the common stockholders’ and the average common equity that are invested in the company.

Formula: $\begin{array}{l}\text{Rate of return on common}\\ \text{stockholders' equity}\end{array}\}=\frac{\text{Net income }-\text{Preferred dividends}}{\text{Average common stockholder’s equity}}$

To compute: The rate of return on common stockholders’ equity for the SC Goods for the year 2016.

(2)

To determine

To describe: The measure of above ratio.