Critelli Company has provided the following comparative information:

You have been asked to evaluate the historical performance of the company over the last five years.
Selected industry ratios have remained relatively steady at the following levels for the last five years:
2008–2012
Rate earned on total assets ........ 15%
Rate earned on stockholders’ equity ..... 18%
Number of times interest charges earned ... 3.5

Instructions
1. Prepare three line graphs, with the ratio on the vertical axis and the years on the horizontal axis for the following three ratios (rounded to one decimal place):
a. Rate earned on total assets
b. Rate earned on stockholders’ equity
c. Number of times interest charges earned
Display both the company ratio and the industry benchmark on each graph.
That is, each graph should have two lines.
2. Prepare an analysis of the graphs in(1).

Transcribed Image Text:

2012 2011 2010 2009 2008 Net income Interest expense Income tax expense $1,785,000 $1,330,000 990,000 768,800 664,000 240,000 200,000 16,000 400,000 615,000 350,000 340,000 300,000 270,000 71,200 Average total assets Average stockholders equity 5,400,000 4300,000 3,100,000 2,650,000 2,200,000 9,500,000 8,000,000 6,000,000 5,200,000 4,500,000