Profitability ratios The following selected data were taken from the financial statements December 31 December 31 December 31 20Y7 20Y6 20Y5 $244,000 $196,000 80,000 80,000 32,000 32,000 16,000 90,960 Total assets Notes payable (8% interest) Common stock Preferred 4% stock, $100 par (no change during year) 16,000 16,000 Retained earnings 60,160 48,000 The 2017 net income was $31,440, and the 20Y6 net income was $12,800. No dividends on common stock were declared between 20Y5 and 20Y7. Preferred dividends were declared and paid in full in 2016 and 2017. 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. When required, round your answers to one decimal place. 20Y6 20Y7 of Vidahill Inc. for December 31, 2017, 2016, and 20Y5: $220,000 80,000 32,000 Return on total assets Return on stockholders' equity Return on common stockholders' equity % b. The profitability ratios indicate that the company's profitability has improved the use of debt. % % % % Since the return on assets is(ess than X the return on stockholders' equity in both years, there must be positive ✓ leverage from

Profitability ratios The following selected data were taken from the financial statements December 31 December 31 December 31 20Y7 20Y6 20Y5 $244,000 $196,000 80,000 80,000 32,000 32,000 16,000 90,960 Total assets Notes payable (8% interest) Common stock Preferred 4% stock, $100 par (no change during year) 16,000 16,000 Retained earnings 60,160 48,000 The 2017 net income was $31,440, and the 20Y6 net income was $12,800. No dividends on common stock were declared between 20Y5 and 20Y7. Preferred dividends were declared and paid in full in 2016 and 2017. 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. When required, round your answers to one decimal place. 20Y6 20Y7 of Vidahill Inc. for December 31, 2017, 2016, and 20Y5: $220,000 80,000 32,000 Return on total assets Return on stockholders' equity Return on common stockholders' equity % b. The profitability ratios indicate that the company's profitability has improved the use of debt. % % % % Since the return on assets is(ess than X the return on stockholders' equity in both years, there must be positive ✓ leverage from

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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