The following selected data were taken from the financial statements of Vidahill Inc. for December 31, 20Y7, 20Y6, and 20Y5: December 31 December 31 December 31 20Y7 20Y6 20Y5 $232,000 90,000 36,000 Total assets Notes payable (8% interest) Common stock Preferred 3% stock, $100 par (no change during year) Retained earnings $258,000 90,000 36,000 18,000 97,690 18,000 72,930 Return on total assets. Return on stockholders' equity Return on common stockholders' equity b. The profitability ratios indicate that the company's profitability has leverage from the use of debt. The 2017 net income wae 25 300 and the 2016 nat ineoma wae £10 470 No dividande on common etork wara darlarad hatuwaan 2015 and 20Y7. Preferred dividends were declared and paid in full in 20Y6 and 20Y7. A measure of the profitability of assets, without regard to the equity of creditors and stockholders in the assets. 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. 20Y7 20Y6 % % $206,000 90,000 36,000 % 18,000 54,000 % % % Since the return on assets is the return on stockholders' equity in both years, there must be
The following selected data were taken from the financial statements of Vidahill Inc. for December 31, 20Y7, 20Y6, and 20Y5: December 31 December 31 December 31 20Y7 20Y6 20Y5 $232,000 90,000 36,000 Total assets Notes payable (8% interest) Common stock Preferred 3% stock, $100 par (no change during year) Retained earnings $258,000 90,000 36,000 18,000 97,690 18,000 72,930 Return on total assets. Return on stockholders' equity Return on common stockholders' equity b. The profitability ratios indicate that the company's profitability has leverage from the use of debt. The 2017 net income wae 25 300 and the 2016 nat ineoma wae £10 470 No dividande on common etork wara darlarad hatuwaan 2015 and 20Y7. Preferred dividends were declared and paid in full in 20Y6 and 20Y7. A measure of the profitability of assets, without regard to the equity of creditors and stockholders in the assets. 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. 20Y7 20Y6 % % $206,000 90,000 36,000 % 18,000 54,000 % % % Since the return on assets is the return on stockholders' equity in both years, there must be
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Profitability ratios.
The following selected data were taken from the financial statements
Total assets
Notes payable (8% interest)
Common stock
Preferred 3% stock, $100 par
(no change during year)
Retained earnings
December 31 December 31 December 31
20Y7
20Y6
20Y5
$258,000
90,000
36,000
18,000
97,690
$232,000
90,000
36,000
18,000
72,930
20Y7
%
of Vidahill Inc. for December 31, 20Y7, 20Y6, and 20Y5:
The 20Y7 net income was 25 300 and the 2016 net income was $10 170 No dividends on common stock were declared between 2015 and 20Y7. Preferred dividends were declared and paid in full in 20Y6 and 20Y7.
A measure of the profitability of assets, without regard to the equity of creditors and stockholders in the assets.
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.
Return on total assets
Return on stockholders' equity
Return on common stockholders' equity
b. The profitability ratios indicate that the company's profitability has
leverage from the use of debt.
%
%
$206,000
90,000
36,000
18,000
54,000
20Y6
%
%
%
.
Since the return on assets is
the return on stockholders' equity in both years, there must be
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