The 20Y7 net income was $28,805, and the 20Y6 net income was $16,750. No dividends on common
Fantastic news! We've Found the answer you've been seeking!
Question:
The 20Y7 net income was $28,805, and the 20Y6 net income was $16,750. No dividends on common stock were declared between 20Y5 and 20Y7. Preferred dividends were declared and paid in full in 20Y6 and 20Y7.
a. Determine the return on total assets, the rate earned on stockholders' equity, and the return on common stockholders’ equity for the years 20Y6 and 20Y7. Round to one decimal place.
20Y7 | 20Y6 | |
Return on total assets | % | % |
Rate earned on stockholders' equity | 17.32% | 28.34% |
Return on common stockholders’ equity | 21.36% | 38.19% |
b. The profitability ratios indicate that Vidahill Inc.'s profitability has deteriorated . Because the rate of return on common stockholders' equity exceeds the rate earned on total assets in both years, there is positive leverage from the use of debt.
Related Book For
Using Financial Accounting Information The Alternative to Debits and Credits
ISBN: 978-1133161646
7th Edition
Authors: Gary A. Porter, Curtis L. Norton
Posted Date: