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Profitability Ratios The following selected data were taken from the financial statements of Vidahill Inc. for December 31, 2017, 20Y6, and 20Y5: December 31 20Y7 20Y6 20Y5 Total assets $163,000 $147,000 $131,000 Notes payable (8% interest) 50,000 50,000 50,000 Common stock 20,000 20,000 20,000 Preferred 5% stock, $100 par 10,000 10,000 10,000 (no change during year) Retained earnings 59,090 39,790 30,000 The 2017 net income was $19,800, and the 2016 net income was $10,290. No dividends on common stock were declared between 2015 and 20Y7. Preferred dividends were declared and paid in full in 2016 and 2017. a. Determine the return on total assets, the rate earned on stockholders' equity, and the return on common stockholders' equity for the years 2016 and 2017. When required, round to one decimal place. 20Y7 20Y6 Return on total assets Return on stockholders' equity Return on common stockholders' equity % % % % % % b. The profitability ratios indicate that Vidahill Inc.'s profitability has leverage from the use of debt. Since the rate of return on assets is the return on stockholders' equity in both years, there must be

Profitability Ratios The following selected data were taken from the financial statements of Vidahill Inc. for December 31, 2017, 20Y6, and 20Y5: December 31 20Y7 20Y6 20Y5 Total assets $163,000 $147,000 $131,000 Notes payable (8% interest) 50,000 50,000 50,000 Common stock 20,000 20,000 20,000 Preferred 5% stock, $100 par 10,000 10,000 10,000 (no change during year) Retained earnings 59,090 39,790 30,000 The 2017 net income was $19,800, and the 2016 net income was $10,290. No dividends on common stock were declared between 2015 and 20Y7. Preferred dividends were declared and paid in full in 2016 and 2017. a. Determine the return on total assets, the rate earned on stockholders' equity, and the return on common stockholders' equity for the years 2016 and 2017. When required, round to one decimal place. 20Y7 20Y6 Return on total assets Return on stockholders' equity Return on common stockholders' equity % % % % % % b. The profitability ratios indicate that Vidahill Inc.'s profitability has leverage from the use of debt. Since the rate of return on assets is the return on stockholders' equity in both years, there must be

Survey of Accounting (Accounting I)
Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter9: Metric-analysis Of Financial Statements
Section: Chapter Questions
Problem 9.17E: Profitability metrics The following selected data were taken from the financial statements of The...
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Profitability Ratios The following selected data were taken from the financial statements of Vidahill Inc. for December 31, 2017, 20Y6, and 20Y5: December 31 20Y7 20Y6 20Y5 Total assets $163,000 $147,000 $131,000 Notes payable (8% interest) 50,000 50,000 50,000 Common stock 20,000 20,000 20,000 Preferred 5% stock, $100 par 10,000 10,000 10,000 (no change during year) Retained earnings 59,090 39,790 30,000 The 2017 net income was $19,800, and the 2016 net income was $10,290. No dividends on common stock were declared between 2015 and 20Y7. Preferred dividends were declared and paid in full in 2016 and 2017. a. Determine the return on total assets, the rate earned on stockholders' equity, and the return on common stockholders' equity for the years 2016 and 2017. When required, round to one decimal place. 20Y7 20Y6 Return on total assets Return on stockholders' equity Return on common stockholders' equity % % % % % % b. The profitability ratios indicate that Vidahill Inc.'s profitability has leverage from the use of debt. Since the rate of return on assets is the return on stockholders' equity in both years, there must be
Transcribed Image Text:Profitability Ratios The following selected data were taken from the financial statements of Vidahill Inc. for December 31, 2017, 20Y6, and 20Y5: December 31 20Y7 20Y6 20Y5 Total assets $163,000 $147,000 $131,000 Notes payable (8% interest) 50,000 50,000 50,000 Common stock 20,000 20,000 20,000 Preferred 5% stock, $100 par 10,000 10,000 10,000 (no change during year) Retained earnings 59,090 39,790 30,000 The 2017 net income was $19,800, and the 2016 net income was $10,290. No dividends on common stock were declared between 2015 and 20Y7. Preferred dividends were declared and paid in full in 2016 and 2017. a. Determine the return on total assets, the rate earned on stockholders' equity, and the return on common stockholders' equity for the years 2016 and 2017. When required, round to one decimal place. 20Y7 20Y6 Return on total assets Return on stockholders' equity Return on common stockholders' equity % % % % % % b. The profitability ratios indicate that Vidahill Inc.'s profitability has leverage from the use of debt. Since the rate of return on assets is the return on stockholders' equity in both years, there must be
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