The following selected data were taken from the financial statements of Vidahill Inc. for December 31, 20Y7, 20Y6, and 20Y5:December 3120Υ720Y620Υ5Total assets$192,000$173,000$154,000Notes payable (8% interest)60,00060,00060,000Common stock24,00024,00024,000Preferred 4% stock, $100 par12.00012,00012,000(no change during year)Retained earnings70,41545,87036,000The 20Y7 net income was $25,025, and the 20Y6 net income was $10,350. No dividends on common stock were declared between 20Y5 and 20Y7. Preferred dividends were declared and paid in full in 20Y6 and 20Y7.a. Determine the return on total assets, the return on stockholders' equity, and the return on common stockholders' equity for the years 20Y6 and 20Y7. Round percentages to one decimal place.20Y720Υ6Return on total assets%Return on stockholders' equityReturn on common stockholders' equity%b. The profitability ratios indicate that the company's profitability hasSince the rate of return on total assets is* the return on stockholders' equity in both years, there must be- leverage from the use of debt.

Return on common Equity=(PAT-Preference dividend)/Average common shareholding equity Return on stock…

Answered: December 31 20Y7 20Υ6 20YS al assets…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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