Show Me How Calculator 20Y7 20Y6 20Y5 20000050000004800000 2

Show Me How Calculator 20Y7 20Y6 20Y5 $,200,000$5,000,000$4,800,000 2,500,000 2,500,000 250,000 Total assets Notes payable (6% interest) 2,500,000 250,000 250,000 Preferred 2.5% stock, $100 par 500,000 0,000 500,000 Retained earnings The 2017 net income was $411,000, and the 20Y6 net income was $462,500. No dividends on common stock were dedared between 20YS and 20Y7. Preferred dividends were declared and paid in full in 20Y6 and 2017, a. Determine the return on total assets, the return on stockholders\' equity, and the return on common stockholders\' equity for the years 20Y6 and 20Y7. 1,574,000 1,222,000 750,000 to one decimal place 20Y7 20Y6 Return on total assets 8.061 x 96 9.41 X 96 ( ( Return on stockholders\' equity 17.691 x % ( 23.45) x % 24.18) x % ( 36.41) x % Return on common stockholders\' equity b. The profitability ratios indicate that the company\'s profitability has deteriorated Because the return on common stockholders\' equity exceeds v the return on total assets in both years, there is positiveleverage from the use of debt. 36.411 X 96 Previous Next

Solution

20Y7 20Y6 Return on Total assets Net Income-Preferred Dividend/Avg total assets*100 8.1 9.4 % 411000/5100000*100 462500/4900000*100 Avg assets 5100000 4900000 ((5200000+5000000)/2)*100 ((4800000+5000000)/2) As 9.4% is coming incorrect than the formula used could be Net Income_preferred dividend/Avg total assets*100 7.7 9.0 % 411000-12500/5200000*100 462500-12500/5000000*100 Return on Stockholder Equity 19.1 26.6 % ans Net Income/Avg stockholder equity*100 411000/2148000*100 462500/1736000*100 Avg stockholder Equity 2148000 1736000 (250000+500000+1574000+250000+500000+1222000)/2 (250000+500000+750000+250000+500000+1222000)/2 Return on Common Stockholder Equity 24.2 36.4 % ans Net Income_preferred Dividend/Avg Common\' stockholder equity*100 (411000-(500000*2.5%)/1648000*100 462500-(500000*2.5%)/1236000*100 Avg common stockholder Equity 1648000 1236000 (250000+1574000+250000+1222000)/2 (250000+750000+250000+1222000)/2 Ans b Is done correctly If any doubt please comment\'