1) Witherspoon Corporation reports the following information on its financial statements for

the current year:

Net income $40,000

Interest expense 6,000

Income tax expense 12,500

Preferred dividends 3,600

Beg. End

Current assets $ 68,000 $ 81,000

Plant assets 340,000 365,000

Current liabilities 41,000 39,000

Long-term liabilities 100,000 90,000

Common stockholders equity 217,000 267,000

Preferred stockholders equity 50,000 50,000

a. Calculate return on assets.

b. Calculate return on equity.

c. Discuss how these measures might be used.