Profitability ratiosThe following selected data were taken from the financial statements ofVidahill Inc. for December 31, 20Y7, 20Y6, and 20Y5: 20Y7 20Y6 20Y5 Total Assests $4,800,000 $4,400,000 $4,000,000 Notes payable (8% interest) 250,0000 2,250,000 2,250,000 Common stock 250,000 250,000 250,000 Preferred 4% stock, $100 par (no change during year) 500,000 500,000 500,000 Retained earnings 1,574,000 1,222,000 750,000 The 20Y7 net income was $372,000, and the 20Y6 net income was$492,000. No dividends on common stock were declared between 20Y5and 2017. Preferred dividends were declared and paid in full in 2016 and20Y7. A. Determine the return on total assets, the rate earned onstockholders' equity, and the return on common stockholders'equity for the years 2016 and 2017. (Round percentages to one decimal place.)B. What conclusions can be drawn from these data as to thecompany's profitability?
Profitability ratiosThe following selected data were taken from the financial statements ofVidahill Inc. for December 31, 20Y7, 20Y6, and 20Y5: 20Y7 20Y6 20Y5 Total Assests $4,800,000 $4,400,000 $4,000,000 Notes payable (8% interest) 250,0000 2,250,000 2,250,000 Common stock 250,000 250,000 250,000 Preferred 4% stock, $100 par (no change during year) 500,000 500,000 500,000 Retained earnings 1,574,000 1,222,000 750,000 The 20Y7 net income was $372,000, and the 20Y6 net income was$492,000. No dividends on common stock were declared between 20Y5and 2017. Preferred dividends were declared and paid in full in 2016 and20Y7. A. Determine the return on total assets, the rate earned onstockholders' equity, and the return on common stockholders'equity for the years 2016 and 2017. (Round percentages to one decimal place.)B. What conclusions can be drawn from these data as to thecompany's profitability?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Profitability ratios
The following selected data were taken from the financial statements of
Vidahill Inc. for December 31, 20Y7, 20Y6, and 20Y5:
| 20Y7 | 20Y6 | 20Y5 | |
| Total Assests | $4,800,000 | $4,400,000 | $4,000,000 |
| Notes payable (8% interest) | 250,0000 | 2,250,000 | 2,250,000 |
| Common stock | 250,000 | 250,000 | 250,000 |
| (no change during year) | 500,000 | 500,000 | 500,000 |
| 1,574,000 | 1,222,000 | 750,000 |
The 20Y7 net income was $372,000, and the 20Y6 net income was
$492,000. No dividends on common stock were declared between 20Y5
and 2017. Preferred dividends were declared and paid in full in 2016 and
20Y7.
A. Determine the return on total assets, the rate earned on
stockholders' equity, and the return on common stockholders'
equity for the years 2016 and 2017. (Round percentages to one decimal place.)
B. What conclusions can be drawn from these data as to the
company's profitability?
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