FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Profitability Ratios

The following selected data were taken from the financial statements of Vidahill Inc. for December 31, 20Y7, 20Y6, and 20Y5:

  December 31
  20Y7 20Y6 20Y5
Total assets $312,000   $281,000   $250,000  
Notes payable (8% interest) 100,000   100,000   100,000  
Common stock 40,000   40,000   40,000  
Preferred 5% stock, $100 par 20,000   20,000   20,000  
  (no change during year)            
Retained earnings 122,610   86,170   60,000  

The 20Y7 net income was $37,440, and the 20Y6 net income was $27,170. 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. When required, round to one decimal place.

  20Y7 20Y6
Return on total assets fill in the blank 1 % fill in the blank 2 %
Return on stockholders’ equity fill in the blank 3 % fill in the blank 4 %
Return on common stockholders’ equity fill in the blank 5 % fill in the blank 6 %
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