Chapter 10, Problem 10.54BE

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

Payment of long-term debt..........	$ 17,045
Proceeds from issuance of common stock...................	8,475
Total liabilities:
Current year-end..........................	32,313
Preceding year-end.....................	38,029
Total stockholders’ equity:
Current year-end..........................	23,471
Preceding year-end.....................	14,045
Long-term liabilities.........................	6,665
Dividends paid....................	$225
Net sales:
Current year..........................	20,000
Preceding year.....................	81,000.
Net income:
Current year..........................	6,488
Preceding year.....................	2,009
Operating income:
Current year..........................	9,980
Preceding year.....................	3,996

Requirements

1. 1. Use DuPont Analysis to calculate Virginia’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?