Morris Corporation decided to issue common stock and used the $300,000 proceeds to retire all of its outstanding bonds on January 1, 2012. The following information is available for the company for 2011 and 2012.

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

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2012 2011 Net income Dividends declared for preferred stockholders Average common stockholders' equity Total assets Current liabilities Total liabilities $ 150,000 $ 182,000 8,000 1,000,000 1,200,000 1,200,000 100,000 100,000 500,000