RCSE stands for Return on Common Stockholders' Equity Ratio. This equation measures a company's success in earning a return for the common stockholders. It is computed by dividing the net income available for common stockholders by common stockholders’ equity. The ratio is usually expressed in percentage.

Input Variables:

N- Net Income

D- Preferred Dividends

S- Average Common Stockholders' Equity

Output for Formula:

Returns the Return on Common Stockholders' Equity Ratio

Notes

Net income less preferred dividends or "income available to common" as it is called can be found by referring to net income on the income statement and to preferred dividends on the statement of retained earnings.