Groundhog Corporation has gathered the following information for the current year:

Net income $40,000

Interest expense 5,150

Income tax expense 15,250

Preferred dividends 4,500

Beginning End

of Year of Year

Current assets $ 70,000 $ 90,000

Current liabilities 45,000 36,000

Plant and equipment 400,000 435,000

Long-term liabilities 125,000 85,000

Common shareholders' equity 225,000 324,000

Preferred shareholders' equity 75,000 75,000

Required

1. Calculate the return on assets.
2. Calculate the return on equity.
3. Comment on how these measures are used.