11 eBook Solvency and Profitability Trend Analysis Addai Company has provided the following comparative information: 2018 2017 2046 2015 2044 $629,400 195,100 151,056 4,123,386 Net income $1,199,600 $1,034,100 $869,000 $742,700 Interest expense 407,900 372,300 321,500 245,100 Income tax expense 383,872 289,548 243,320 193,102 Total assets (ending balance) 6,901,360 7,261,636 5,239,698 5,437,432 Total stockholders' equity (ending balance) 2,201,855 2,645,013 1,690,837 2,095,655 Average total assets 7,081,498 6,250,667 5,338,565 4,531,193 Average stockholders' equity 2,423,434 2,167,925 1,893,246 1,676,524 You have been asked to evaluate the historical performance of the company over the last five years. 1,257,393 3,852,804 1,467,133 Selected industry ratios have remained relatively steady at the following levels for the last five years: 2014-2018 Return on total assets 22.4% Return on stockholders' equity 46.3% Times interest earned 4.6 Ratio of liabilities to stockholders' equity 2.1 Required Ch. 17 HW eBook Required: 1. Determine the following for the years 20Y4 through 2048. Round to one decimal place: a. Return on total assets: 20Y8 16.94 X % 2017 16.54 X % 2016 16.28 X % 2015 16.39 X % 2014 16.34 X % b. Return on stockholders' equity: 20Y8 49.50 % 2017 47.70 % 2016 45.90 % 2015 44.30 % 2014 42.90 % c. Times interest earned: 20Y8 4.88 X 2017 4.50 x 2016 4.45 2015 4.81 2014 5.00 d. Ratio of liabilities to stockholders' equity: 20Y8 2.13 X 2017 1.74 x 2016 2.09 X 2015 1.59 X 2014 2.27 x 2. Refer to the selected industry ratios provided above. Both the rate earned on total assets and the rate earned on stockholders' equity have been moving in a positive direction in the last five years. Both measures have moved above the industry average over the last two years. The cause of this change is driven by a rapid increase in earnings