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Return On Average Common Equity

Definition - What does Return On Average Common Equity mean?

Return on average common equity is a financial statistic which is used to measure a company's performance over a given period of time, typically a year. Common equity refers to equity that is held by common shareholders, and not by preferred shareholders. So, return on average common equity is the returning equity that is gained by common shareholders over a period of time.

Justipedia explains Return On Average Common Equity

Companies often sell shares of their company, or stocks, in order to secure funding to help grow their business. If a company is growing, and doing well, then these shares often become more valuable. So, if a company has a return on average common equity that is positive, this is an indication that the company is going in the right direction. There are many statistics that are used to determine a company's success however. Return on average common equity is just one of these statistics.

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