EBK FINANCIAL & MANAGERIAL ACCOUNTING
13th Edition
ISBN: 9780100545052
Author: WARREN
Publisher: YUZU
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Textbook Question
Chapter 15, Problem 15.17EX
Profitability ratios
The following selected data were taken from the financial statements of Robinson Inc. for December 31, 2016, 2015 and 2014:
| December31 | |||
| 2016 | 2015 | 2014 | |
| Total assets......................................... | $4,800,000 | $4,400,000 | $4,000,000 |
| Notes payable (8% interest)........................... | 2,250,000 | 2,250,000 | 2,250,000 |
| Common stock...................................... | 250,000 | 250,000 | 250,000 |
| 500,000 | 500,000 | 500,000 | |
| 1,574,000 | 1,222,000 | 750,000 | |
The 2016 net income was $372,000, and the 2015 net income was $492,000. No dividends on common stock were declared between 2014 and 2016.
- a. Determine the rate earned on total assets, the rate earned on stockholders’ equity, and the rate earned on common Stockholders’ equity for the years 2015 and 2016. Round to one decimal place.
- b. What conclusions can be drawn from these data as to the company’s profitability?
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Chapter 15 Solutions
EBK FINANCIAL & MANAGERIAL ACCOUNTING
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