Addai Company has provided the following comparative information: 20Υ8 20Y7 20Υ6 20Y5 20Y4 Net income $273,406 $367,976 $631,176 $884,000 $800,000 Interest expense 616,047 572,003 528,165 495,000 440,000 Income tax expense 31,749 53,560 106,720 160,000 200,000 Total assets (ending balance) 4,417,178 4,124,350 3,732,443 3,338,500 2,750,000 Total stockholders' equity (ending balance) 3,706,557 3,433,152 3,065,176 2,434,000 1,550,000 Average total assets 4,270,764 3,928,396 3,535,472 3,044,250 2,475,000 Average total stockholders' equity 3,569,855 3,249,164 2,749,588 1,992,000 1,150,000 You have been asked to evaluate the historical performance of the company over the last five years. Selected industry ratios have remained relatively steady at the following levels for the last five years: 20Υ4-2ΟΥ8 Return on total assets 28% Return on stockholders' equity 18% Times interest earned 2.7 Ratio of liabilities to stockholders' equity 0.4 Required: 1. Determine the following for the years 20Y4 through 20Y8 for each of the graphs below. Use the amounts given above in your calculations. Round to one decimal place: a. Return on total assets:

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Chapter1: Financial Statements And Business Decisions
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Solvency and Profitability Trend Analysis
Addai Company has provided the following comparative information:
20Y8
20Υ7
20Y6
20Υ5
20Y4
Net income
$273,406
$367,976
$631,176
$884,000
$800,000
Interest expense
616,047
572,003
528,165
495,000
440,000
Income tax expense
31,749
53,560
106,720
160,000
200,000
Total assets (ending balance)
4,417,178
4,124,350
3,732,443
3,338,500
2,750,000
Total stockholders' equity (ending balance)
3,706,557
3,433,152
3,065,176
2,434,000
1,550,000
Average total assets
4,270,764
3,928,396
3,535,472
3,044,250
2,475,000
Average total stockholders' equity
3,569,855
3,249,164
2,749,588
1,992,000
1,150,000
You have been asked to evaluate the historical performance of the company over the last five years.
Selected industry ratios have remained relatively steady at the following levels for the last five years:
20Υ4-20Υ8
Return on total assets
28%
Return on stockholders' equity
18%
Times interest earned
2.7
Ratio of liabilities to stockholders' equity
0.4
Required:
1. Determine the following for the years 20Y4 through 20Y8 for each of the graphs below. Use the amounts given above in your calculations. Round to one decimal place:
a. Return on total assets:
Transcribed Image Text:Solvency and Profitability Trend Analysis Addai Company has provided the following comparative information: 20Y8 20Υ7 20Y6 20Υ5 20Y4 Net income $273,406 $367,976 $631,176 $884,000 $800,000 Interest expense 616,047 572,003 528,165 495,000 440,000 Income tax expense 31,749 53,560 106,720 160,000 200,000 Total assets (ending balance) 4,417,178 4,124,350 3,732,443 3,338,500 2,750,000 Total stockholders' equity (ending balance) 3,706,557 3,433,152 3,065,176 2,434,000 1,550,000 Average total assets 4,270,764 3,928,396 3,535,472 3,044,250 2,475,000 Average total stockholders' equity 3,569,855 3,249,164 2,749,588 1,992,000 1,150,000 You have been asked to evaluate the historical performance of the company over the last five years. Selected industry ratios have remained relatively steady at the following levels for the last five years: 20Υ4-20Υ8 Return on total assets 28% Return on stockholders' equity 18% Times interest earned 2.7 Ratio of liabilities to stockholders' equity 0.4 Required: 1. Determine the following for the years 20Y4 through 20Y8 for each of the graphs below. Use the amounts given above in your calculations. Round to one decimal place: a. Return on total assets:
b. Return on stockholders' equity:
80.0%
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
20Υ8
20Υ7
20Y6
20Y5
20Υ4
Year
- Company's retum on stockholders' equity
-Industry returm on stockholders' equity
20Υ8
X %
20Y7
х %
20Υ6
х %
20Y5
X %
20Y4
X %
Return on Stockholders' Equity
Transcribed Image Text:b. Return on stockholders' equity: 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 20Υ8 20Υ7 20Y6 20Y5 20Υ4 Year - Company's retum on stockholders' equity -Industry returm on stockholders' equity 20Υ8 X % 20Y7 х % 20Υ6 х % 20Y5 X % 20Y4 X % Return on Stockholders' Equity
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