a. Determine the return on total assets, the rate earned on stockholders' equity, and the return on common stockholders' equity for the years 2016 and 20Y7. When required, round to one decimal place. 20Y7 20Y6 Return on total assets Return on stockholders' equity Return on common stockholders' equity b. The profitability ratios indicate that Vidahill Inc.'s profitability has % % % % % Since the rate return on assets is the return on stockholders' equity both years, there must bel leverage from the use of det
a. Determine the return on total assets, the rate earned on stockholders' equity, and the return on common stockholders' equity for the years 2016 and 20Y7. When required, round to one decimal place. 20Y7 20Y6 Return on total assets Return on stockholders' equity Return on common stockholders' equity b. The profitability ratios indicate that Vidahill Inc.'s profitability has % % % % % Since the rate return on assets is the return on stockholders' equity both years, there must bel leverage from the use of det
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question

Transcribed Image Text:The following selected data were taken from the financial statements of Vidahill Inc. for December 31, 2017, 20Y6, and 2015:
December 31
Total assets
Notes payable (8% interest)
Common stock
Preferred 4% stock, $100 part
(no change during year)
20Y7
$204,000
70,000
28,000
14,000
20Y6
$184,000
70,000
28,000
14,000
73,380
Retained earnings
51,840
42,000
The 2017 net income was $22,100, and the 20Y6 net income was $10,400. No dividends on common stock were declared between 20Y5 and 2017. Preferred dividends were declared and paid in full in 2016 and 20Y7.
a. Determine the return on total assets, the rate earned on stockholders' equity, and the return on common stockholders' equity for the years 20Y6 and 20Y7. When required, round to one decimal place.
20Y7
20Y6
Return on total assets
Return on stockholders' equity
Return on common stockholders' equity
b. The profitability ratios indicate that Vidahill Inc.'s profitability has
%
%
20Y5
$164,000
70,000
28,000
%
14,000
M
%
%
Since the rate of return on assets is
the return on stockholders' equity in both years, there must be
leverage from the use of debt.
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