whats the return on assets? whats the return on common stockholders equity?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
whats the return on assets?
whats the return on common
Transcribed Image Text:Ivanhoe Medical
Comparative Income Statement and Statement of Retained Earnings
For the Year
2020
2019
Sales revenue (all on account)
$ 10,177,200
$ 9,613,900
Cost of goods sold
5,613,150
5,298,750
Gross profit
4,564,050
4,315,150
Operating expenses
2,840,250
2,634,150
Net operating income
1,723,800
1,681,000
Interest expense
300,400
308,650
Net income before taxes
1,423,400
1,372,350
Income taxes (30%)
427,020
411,705
Net income
$ 996,380
$ 960,645
Dividends paid
Preferred dividends
29,550
29,550
Common dividends
433,450
413,050
Total dividends paid
463,000
442,600
Net income retained
533,380
518,045
Retained earnings, beginning of year
3,660,395
3,142,350
Retained earnings, end of year
$ 4,193,775
$ 3,660,395
Transcribed Image Text:2020
2019
Assets
Current assets
Cash
$ 380,000
$ 417,500
Accounts receivable, net
1,035,000
776,500
Inventory
726,000
681,050
Other current assets
381,400
247,000
Total current assets
2,522,400
2,122,050
Property, plant, & equipment, net
8,738,625
8,439,845
Total assets
$ 11,261,025
$ 10,561,895
Liabilities and Stockholders' Equity
Current liabilities
$ 3,201,000
$ 2,846,100
Long-term debt
3,702,650
3,892,600
Total liabilities
6,903,650
6,738,700
Preferred stock, $5 par value
58,900
58,900
Common stock, $0.25 par value
104,700
103,900
Retained earnings
4,193,775
3,660,395
Total stockholders' equity
4,357,375
3,823,195
Total liabilities and stockholders' equity
$ 11,261,025
$ 10,561,895
Expert Solution
Step 1
The Return on assets
It is the return ratio calculated by dividing Net income by total average assets. It measures the return earned on total assets used in business and efficiency to generate profit using assets.
Formula = Net Income / Total Average Assets x 100
For year 2020
Net Income = 996380
Total Average Assets = (11261025+10561895)/2 = 10911460
Return on assets = 996380/10911460*100 = 9.13%
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