Shareholder Equity or just Common Stock? Hey guys, so I lost my financial management book but i do have my notes. now correct me if im wrong, but my notes says the formula for return on equity is:

ROE = Operating Income (EBIT) / Common Stock

is this right?

because im calculating the ROE for Komatsu : http://finance.yahoo.com/q/bs?s=KMTUY.PK&annual

and if i use the formula above i would get:

$786,000/$726,000 = 108%!!!

im reading up on google and each website says different things so im confused!
do i use net income instead and total shareholders equity?

thanks guys!