Korsak Corporation decided to issue common stock and used the $300,000 proceeds to redeem all of its outstanding bonds on January 1, 2014. The following information is available for the company for 2013 and 2014.

Instructions
(a) Compute the return on common stockholders’ equity for both years.
(b) Explain how it is possible that net income increased but the return on common stock-holders’ equity decreased.
(c) Compute the debt to assets ratio for both years, and comment on the implications of this change in the company’ssolvency.

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2014 2013 Net income Dividends declared for preferred stockholders Average common stockhold Total assets Current liabilties Total liabilities 8,000 1,000,000 1,200,000 100,000 200,000 182,000 $150,000 8,000 700,000 1,200,000 100,000 500,000 ers equity