Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Critelli Company has provided the following comparative information: Year 5 Year 4 Year 3 Year 2 Year 1 Net income $1,314,900 $1,133,500 $952,500 $814,100 $689,900

Critelli Company has provided the following comparative information:

Year 5Year 4Year 3Year 2Year 1
Net income$1,314,900$1,133,500$952,500$814,100$689,900
Interest expense447,100408,100352,400268,700213,900
Income tax expense420,768317,380266,700211,666165,576
Average total assets10,678,7889,457,6698,104,9696,941,0265,946,053
Average stockholders' equity3,553,7843,220,1702,851,7962,560,0632,269,408

You have been asked to evaluate the historical performance of the company over the last five years.

Selected industry ratios have remained relatively steady at the following levels for the last five years:

Industry Ratios
Return on total assets16.2 %
Return on stockholders' equity33.8 %
Times interest earned4.6

Instructions:

Calculate three ratios for Year 1 through Year 5. Round to one decimal place.

a. Return on total assets:

b. Return on stockholders' equity:

c. Times interest earned:

Step by Step Solution

3.51 Rating (161 Votes )

There are 3 Steps involved in it

Step: 1

a Return on Total Assets ROA ROA Net Income Average Total Assets Year 1 ROA 689900 5946053 0116 or 1... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Income Tax Fundamentals 2013

Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill

31st Edition

1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516

More Books

Students also viewed these Accounting questions