Groundhog Corporation has gathered the following information for the current year: $40,000 5,150 15,250 4,500 Net...

 

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Groundhog Corporation has gathered the following information for the current year: $40,000 5,150 15,250 4,500 Net income Interest expense Income tax expense Preferred dividends Current assets Current liabilities Plant and equipment Long-term liabilities Beginning of Year $ 70,000 45,000 400,000 125,000 Common shareholders' equity 225,000 Preferred shareholders' equity 75,000 End of Year $ 90,000 36,000 435,000 85,000 324,000 75,000 Required 1. Calculate the return on assets. 2. Calculate the return on equity. 3. Comment on how these measures are used. Groundhog Corporation has gathered the following information for the current year: $40,000 5,150 15,250 4,500 Net income Interest expense Income tax expense Preferred dividends Current assets Current liabilities Plant and equipment Long-term liabilities Beginning of Year $ 70,000 45,000 400,000 125,000 Common shareholders' equity 225,000 Preferred shareholders' equity 75,000 End of Year $ 90,000 36,000 435,000 85,000 324,000 75,000 Required 1. Calculate the return on assets. 2. Calculate the return on equity. 3. Comment on how these measures are used.

Answer rating: 100% (QA)

To calculate the return on assets ROA and return on equity ROE well use the following formulas Return on Assets ROA Net Income Average Total Assets Re... View the full answer