Haviland 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 ........18%
Rate earned on stockholders' equity .....22%
Number of times interest charges earned ...3.0
Ratio of liabilities to stockholders' equity ..1.5
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 (rounded to one decimal place):
a. Rate earned on total assets
b. Rate earned on stockholders' equity
c. Number of times interest charges 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:

2012 2011 2010 2008 Net income Interest expense Income tax expense Total assets (ending balance) Total stockholders' equity 2,785,860 $1,857,240 1,386,000 924,000 700,000 427,000 350,000 220,800 160,000 16,321,384 12,554,91 9,511,296 6,993,600 5,640,000 736,442 612,786 624,103 422,611 538,020 320,160 (ending balance) Average total assets Average stockholders equity 9,653,100 6,867,240 5,010,000 3,624,000 2,700,000 14,438,147 11,033,103 8,252,448 6,316,800 4,820,000 8,260,170 5,938,620 4,317,000 3,162,000 2,350,000 2