Daykin Company manufactures raingear. During 2012, Daykin Company decided to issue bonds at 8% interest and then used the cash to purchase a significant amount of treasury stock. The following information is available for Daykin Company.

Instructions(a) Use the information above to calculate the following ratios for both years: (i) return on assets ratio, (ii) return on common stockholders' equity ratio, (iii) payout ratio, (iv) debt to total assets ratio, and (v) times interest earned ratio.(b) Referring to your findings in part (a), discuss the changes in the company's profitability from 2011 to 2012.(c) Referring to your findings in part (a), discuss the changes in the company's solvency from 2011 to 2012.(d) Based on your findings in (b), was the decision to issue debt to purchase common stock a wiseone?

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2012 2011 Sales $3,000,000 850,000 50,000 190,000 $3,000,000 780,000 120,000 166,000 5,000,000 Net income Interest expense Тах еxpense Total assets 5,610,000 Average total assets Total liabilities 5,312,500 6,230,000 1,200,000 5,250,000 300,000 40,000 2,000,000 3,322,500 270,000 40,000 Average total stockholders' equity Dividends paid on common stock Dividends paid on preferred stock