Emporia Plastics, Inc Operating income $532,150 Bond interest expense 135,000 397,150 Income taxes 183,432 Net income $213,718 Bonds payable $1,000,000 Common stock 875,000 Retained earnings 375,000 Instructions a Compute the return on common stockholders equity and the rate of interest paid on bon...

1 Return on common stockholders equity Net Income Common stock100 213 ...

Emporia Plastics, Inc. Operating income $532,150 Bond interest expense 135,000 397,150 Income taxes 183,432 Net income $213,718

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Question:

Emporia Plastics, Inc.

Operating income		$532,150
Bond interest expense		135,000
		397,150
Income taxes		183,432
Net income		$213,718
Bonds payable		$1,000,000
Common stock		875,000
Retained earnings		375,000

Instructions

a. Compute the return on common stockholders’ equity and the rate of interest paid on bonds. (Assume balances for debt and equity accounts approximate averages for the year.)

b. Is Emporia Plastics, Inc. trading on the equity successfully? Explain.