Just a quick unrelated question When analyzing equity ratios (ROE, etc.) is it appropriate to strike against stockholders equity as a whole or as (stockholders equity - additional paid in capital)? Example: ROE = NI/Stockholders Equity (Entire) or ROE = NI/(Stockholders equity - additional paid in capital)
hmm…good question…i would just go with the entire SE, unless the question mentions something about using an adjusted base
^^ also .keep in mind to use beginning SE…several times you’ll get the wrong answer if you use the end of period equity
But use average if not explicitly stated, right?
I would use all the equity
Use beginning SHE
Thats interesting… thats what I would have thought too… I have looked at financials where they strike ROE as NI / (SE - Additional paid in Cap.) This would obviously boost ROE