The following selected data were taken from the financial statements of Vidahill Inc. for December 31, 20Y7, 20Y6, and 20Y5:   December 31   20Y7 20Y6 20Y5 Total assets $275,000   $248,000   $221,000   Notes payable (8% interest) 90,000   90,000   90,000   Common stock 36,000   36,000   36,000   Preferred 3% stock, $100 par 18,000   18,000   18,000     (no change during year)             Retained earnings 102,555   70,255   54,000   The 20Y7 net income was $32,840, and the 20Y6 net income was $16,795. 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. Return on total assets Return on stockholders’ equity Return on common stockholders’ equity

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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The following selected data were taken from the financial statements of Vidahill Inc. for December 31, 20Y7, 20Y6, and 20Y5:

  December 31
  20Y7 20Y6 20Y5
Total assets $275,000   $248,000   $221,000  
Notes payable (8% interest) 90,000   90,000   90,000  
Common stock 36,000   36,000   36,000  
Preferred 3% stock, $100 par 18,000   18,000   18,000  
  (no change during year)            
Retained earnings 102,555   70,255   54,000  

The 20Y7 net income was $32,840, and the 20Y6 net income was $16,795. 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.

Return on total assets

Return on stockholders’ equity

Return on common stockholders’ equity 

Expert Solution
Step 1: Define Ratio Analysis -

The ratio is the technique used by the prospective investor or an individual or strategist to read the company information in more detailed and accurate ways.

The ratio immediately determines the liquidity, profitability, and solvency of the company.

By using ratio analysis comparison between two companies can also be done very easily and accurately.

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