Crosby 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:
20Y4-20Y8
Return on total assets......................................19%
Return on stockholders' equity...........................26%
Times interest earned.......................................3.4
Ratio of liabilities to stockholders' equity...............1.4
Instructions
1. Prepare four line graphs with the ratio on the vertical axis and the years on the horizontal axis for the following four ratios, rounding ratios and percentages to one decimal place:
a. Return on total assets
b. Return on stockholders' equity
c. Times interest earned
d. Ratio of liabilities to stockholders' equity
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:

20Y8 20Y7 20Y6 20Y5 20Y4 Net income 5,571,720 $ 3,714,480 2,772,000 1,848,000 $1,400,000 768,600 640,320 Interest expense 1,052,060 891,576 845,222 610,000 441,600 500,000 Income tax expense Total assets (ending balance) Total stockholders' equity 320,000 29,378,491 22,598,839 17,120,333 12,588,480 10,152,000 1,225,572 (ending balance) 18,706,200 13,134,480 9,420,000 6,648,000 4,800,000 25,988,665 19,859,586 14,854,406 11,370,240 8,676,000 Average total stockholders'equity 15,920,340 11,277,240 8,034,000 5,724,000 4,100,000 Average total assets