(LO4) (Trading on the Equity Analysis) Presented below is information from the annual report of Emporia Plastics, Inc.

Instructions

(a) Compute the return on common stockholders’ equity and the rate of interest paid on bonds. (Assume balances for debt and equity accounts approximate averages for the year.)

(b) Is Emporia Plastics, Inc. trading on the equity successfully? Explain.

Transcribed Image Text:

Operating income Bond interest expense Income taxes Net income Bonds payable Common stock Retained earnings $ 532,150 135,000 397,150 183,432 $ 213,718 $1,000,000 875,000 375,000