def roce(net_income, preferred_dividends, average_common_equity):
    """Computes return on common equity.

    Parameters
    ----------
    net_income : int or float
        Net income
    preferred_dividends : int or float
        Preferred dividends
    average_common_equity : int or float
        Average common equity

    Returns
    -------
    out : int or float
        Return on common equity
    """
    return (net_income - preferred_dividends) / average_common_equity