Analysis of Profitability Nort Corporation re- ported the following information in its financial statements:

a. What was the return on total assets for each of the 2 years?

b. What was the return on owners’ equity for each of the 2 years?

c. What was the return on common equity for each of the 2 years?

d. Have the financial position and operating results of Nort Corporation for 2001 improved over 2000 or worsened?
On what do you base your answer?

e. If the computed return on common equity had been less than the return on owners’ equity, would it be more desirable to hold an investment in Nort’s preferred stock or common stock? Explain.

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2001 2000 Net income $ 95,000 $ 64,000 Preferred dividends paid 14.000 11.200 Balance sheet totals. December 31 Total assets 900,000 819,000 Total liabilities 300,000 300,000 Preferred stock outstanding ($10 par value) 200,000 160,000 Common stock outstanding ($5 par value) 100,000 100,000 Retained Earnings 300,000 259,000