20Y8 20Y7 20Υ6 20YS 20Υ4 $ 800,000 $ 273,406 $ 367,976 $ 631,176 $ 884,000 616,047 31,749 4,417,178 Net income Interest expense 572,003 528,165 495,000 440,000 Income tax expense 53,560 106,720 160,000 200,000 Total assets (ending balance) Total stockholders' equity (ending balance) Average total assets Average total stockholders' equity 3,569,855 4,124,350 3,732,443 3,338,500 2,750,000 3,706,557 3,433,152 3,065,176 2,434,000 1,550,000 4,270,764 3,928,396 3,535,472 3,044,250 2,475,000 3,249,164 2,749,588 1,992,000 1,150,000 20Y4-20Y8 Return on total assets 28% Return on stockholders' equity 18% Times interest earned 2.7 Ratio of liabilities to stockholders' equity 0.4
Solvency and profitability trend analysis Addai Company has provided the following comparative information:
You have been asked to evaluate the historical performance of the company over the la.st five years.
Selected industry ratios have remained relatively steady at the following levels for the last five years:
Instructions
1. Prepare four line graphs with the ratio on the vertical axis and the years on the horizontal axis for the following four ratios (round to one decimal place):
A. Return on total assets
B. Return on
C. Times interest earned
D. Ratio of liabilities to stockholders' equity
Display both the company ratio and the industry benchmark on each graph. That is, each graph should have two lines.
2. Prepare an analysis of the graphs in (1).
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