The following selected data were taken from the financial statements of Vidahill Inc. for December 31, 20Y7, 20Y6, December 31 20Υ7 20Υ6 20Y5 Total assets $168,000 $151,000 $134,000 Notes payable (8% interest) 60,000 60,000 60,000 Common stock 24,000 24,000 24,000 Preferred 4% stock, $100 par 12,000 12,000 12,000 (no change during year) Retained earnings 67,085 48,045 36,000 The 20Y7 net income was $19,520, and the 20Y6 net income was $12,525. No dividends on common stock were declared 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' equit and 20Y7. Round percentages to one decimal place. 20Υ7 20Υ6 Return on total assets 15.2 V % 12.2 % Return on stockholders' equity 20.9 16.1 V % Return on common stockholders' equity % b. The profitability ratios indicate that the company's profitability has improved v Since the rate of return on total assets the return on stockholders' eauitv in both vears there must be nositive v leverace from the use of debt.

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Pls answer with explanations return on common stockholders equity for 2016 and 2017 thx
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The following selected data were taken from the financial statements of Vidahill Inc. for December 31, 20Y7, 20Y6,
December 31
20Υ7
20Y6
20Y5
Total assets
$168,000
$151,000
$134,000
Notes payable (8% interest)
60,000
60,000
60,000
Common stock
24,000
24,000
24,000
Preferred 4% stock, $100 par
12,000
12,000
12,000
(no change during year)
Retained earnings
67,085
48,045
36,000
The 20Y7 net income was $19,520, and the 20Y6 net income was $12,525. No dividends on common stock were declared
20Y7. Preferred dividends were declared and paid in full in 20Y6 and 20Y7.
a. Determine the return on total assets, the return on stockholders' equity, and the return on common stockholders' equity
and 20Y7. Round percentages to one decimal place.
20Y7
20Y6
Return on total assets
15.2
12.2
Return on stockholders' equity
20.9
16.1
Return on common stockholders' equity
%
b. The profitability ratios indicate that the company's profitability has improved v
Since the rate of return on total assets
the return on stackholders' eauitv in both vears, there must be oositive v
leverage from the use of debt.
#
%2$
&
3
4.
5
8.
9.
e
y
d
f
Transcribed Image Text:igeNOWV2 | 0. еВook Show Me How E Calculator The following selected data were taken from the financial statements of Vidahill Inc. for December 31, 20Y7, 20Y6, December 31 20Υ7 20Y6 20Y5 Total assets $168,000 $151,000 $134,000 Notes payable (8% interest) 60,000 60,000 60,000 Common stock 24,000 24,000 24,000 Preferred 4% stock, $100 par 12,000 12,000 12,000 (no change during year) Retained earnings 67,085 48,045 36,000 The 20Y7 net income was $19,520, and the 20Y6 net income was $12,525. No dividends on common stock were declared 20Y7. Preferred dividends were declared and paid in full in 20Y6 and 20Y7. a. Determine the return on total assets, the return on stockholders' equity, and the return on common stockholders' equity and 20Y7. Round percentages to one decimal place. 20Y7 20Y6 Return on total assets 15.2 12.2 Return on stockholders' equity 20.9 16.1 Return on common stockholders' equity % b. The profitability ratios indicate that the company's profitability has improved v Since the rate of return on total assets the return on stackholders' eauitv in both vears, there must be oositive v leverage from the use of debt. # %2$ & 3 4. 5 8. 9. e y d f
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