Chapter 10, Problem 10.37AE

(Learning Objective 5: Evaluate profitability) Carolina Company included the following items in its financial statements for 2018, the current year (amounts in millions):

Payment of long-term debt..........	$17,100
Proceeds from issuance of common stock.....................	8,500
Total liabilities:
Current year-end.....................	32,319
Preceding year-end..................	38,023
Total stockholders’ equity:
Current year-end.....................	23,479
Preceding year-end..................	14,033
Long-term liabilities....................	6,585
Dividends paid.....................	$ 215
Net sales;
Current year.....................	60,000
Preceding year	92,000
Net income:
Current year.....................	2,200
Preceding year..................	2,005
Operating income:
Current year.....................	4,880
Preceding year..................	4,006

Requirements

1. 1. Use DuPont Analysis to calculate Carolina’s return on assets and return on common equity during 2018 (the current year). The company has no preferred stock outstanding.
2. 2. Do the company’s rates of return look strong or weak? Give your reason.
3. 3. What additional information do you need to make the decision in requirement 2?