You have been asked to consider investing in ASAP Printing Services Inc.

Additional information:

Total assets at January 1, 2019, were $4,050,000.

Net income for 2019 was $420,000.

No new shares were issued in 2019.

Required

1. Calculate the following for 2019, reporting the answers to two decimal places:

a. Return on total assets

b. Return on common shareholders’ equity

2. If the minimum rate of return for each of the above ratios is 12 percent, will you invest in this business?

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ASAP Printing Services Inc. Balance Sheet December 31, 2019 Assets Liabilities Current assets Current liabilities Cash $384,000 Accounts payable 90,000 Accounts receivable, net 318,000 Accrued liabilities 50,400 Inventory 420,000 Total current liabilities $ 140,400 Prepaid expenses 3,600 Long-term note payable 600,000 Total current assets $1,125,600 Total liabilities $ 740,400 Property, plant, and equipment, net 3,360,000 Shareholders' Equity Contributed capital Preferred shares, $2.50, cumulative, Intangible assets 24,000, authorized and issued $ 240,000 Common shares, 300,000 shares authorized, 200,000 shares issued 2,500,000 Trademark, net $ 20,400 Organization costs 18,000 Total contributed capital 2,740,000 Total intangible assets 38,400 Retained earnings 1,043,600 Total shareholders' equity 3,783,600 Total assets $4,524.000 Total liabilities and shareholders' equity $4,524,000