Kojak Corporation decided to issue common stock and used the $300,000 proceeds to redeem all of its outstanding bonds on January 1,2025. The following information is available for the company for 2025 and 2024. www.ww Net income Dividends declared for preferred stockholders Average common stockholders' equity Total assets Current liabilities Total liabilities Return on common stockholders' equity 17.4% Debt to assets ratio 2025 16.7% 2024 41.7% 2025 $ 182,000 8,000 1,000,000 1,200,000 100,000 200,000 2025 2024 20.3% 2024 $ 150,000 8,000 700,000 1,200,000 100,000 500,000
Kojak Corporation decided to issue common stock and used the $300,000 proceeds to redeem all of its outstanding bonds on January 1,2025. The following information is available for the company for 2025 and 2024. www.ww Net income Dividends declared for preferred stockholders Average common stockholders' equity Total assets Current liabilities Total liabilities Return on common stockholders' equity 17.4% Debt to assets ratio 2025 16.7% 2024 41.7% 2025 $ 182,000 8,000 1,000,000 1,200,000 100,000 200,000 2025 2024 20.3% 2024 $ 150,000 8,000 700,000 1,200,000 100,000 500,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Kojak Corporation decided to issue common stock and used the $300,000 proceeds to redeem all of its outstanding bonds on January
1,2025. The following information is available for the company for 2025 and 2024.
Net income
Dividends declared for preferred stockholders
Average common stockholders' equity
Total assets
Current liabilities
Total liabilities
Return on common stockholders' equity
Debt to assets ratio
2025
16.7%
2024
41.7%
17.4%
2025
$ 182,000
2025
8,000
1,000,000
1,200,000
100,000
200,000
2024
20.3%
2024
$ 150,000
8,000
700,000
1,200,000
100,000
500,000
Transcribed Image Text:Explain how it is possible that net income increased but the return on common stockholders' equity decreased.
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Comment on the change in the debt to assets ratio for both years and the implications of this change in the company's solvency.
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