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r=assignments&takeAssignmentSessionl; ocator-assignment take&inprogress-f;|. eBook Show Me How Calculator 500,000 1,574,000 no during year) 500,000 Retained earnings 500,000 1,222,000 750,000 The 20Y7 net income was $411,000, and the 20Y6 net income was $462,500. No dividends on common stock were Preferred dividends were dedared and paid in full in 20Y6 and 20Y7. dedared between 20YS and 20Y7 a. Determine the return on total assets, the return on stockholders\' equity, and the return on common stock Round percentages to one decimal place. stockholders\' equity for the years 20Y6 and 20v7 20Y7 20Y6 9.01 x % 26.61 % Return on total assets Return on stockholders\' equity Return on common stockholders\' equity b. The profitability ratios indicate that the company\'s profitability has deteriorated Because the return on common the return on total assets in both years, there is positiveleverage from the use of debt. 8.0 % 10.1 % 24.2 1 % Divide the sum of net income plus interest expense by average total assets. Average tot Divide net income by average total stockholders equity. Average total stockholders\'equity (Beginning total stockholders al assets -(Beginning total assets +Ending total assets) + 2 equity + Ending total Divide net income minus oreferred dividends bv average common stockholders\'eauitv. Comm on stockholders\'eauity - Common stock + Retained Next

Solution

20Y6: Net Income 20Y6 = $462,500

Total Assets 20Y5 = $4,800,000

Total Assets 20Y6 = $5,000,000

Average Total Assets = ($4,800,000 + $ 5,000,000)/2 = 4,900,000

Return on Total Assets = Net inocme / Average total assets

= $462,500 / $4,900,000

= 9.44 %

20Y7: Net Income 20Y6 = $411,000

Total Assets 20Y7 = $5,200,000

Total Assets 20Y6 = $5,000,000

Average Total Assets = ($5,200,000 + $ 5,000,000)/2 = 5,100,000

Return on Total Assets = Net inocme / Average total assets

= $411,000 / $5,100,000

= 8.06 %