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Profitability ratios The following selected data were taken from the financial statements of Vidahill Inc. for December 31, 20Y7, 20Y6, and 20Y5: December 31 2017

Profitability ratios The following selected data were taken from the financial statements of Vidahill Inc. for December 31, 20Y7, 20Y6, and 20Y5: December 31 2017 20Y6 2015 Total assets $155,000 $140,000 $125,000 Notes payable (8% interest) 50,000 50,000 50,000 Common stock 20,000 20,000 20,000 Preferred 4% stock, $100 par 10,000 10,000 10,000 (no change during year) Retained earnings 57,225 40,500 30,000 The 2017 net income was $17,125, and the 20Y6 net income was $10,900. No dividends on common stoc were declared between 2005 and 20Y7. Preferred dividends were declared and paid in full in 2016 and 2017. a. Determine the return on total assets, the return on stockholders' equity, and the return on common stockholders' equity for the years 20Y6 and 20Y7. When required, round your answers to one decimal place. Return on total assets Return on stockholders' equity Return on common stockholders' equity 2017 2016 % % % % % % b. The profitability ratios indicate that the company's profitability has . Since the return on assets is the return on stockholders' equity in both years, there must be leverage from the use of debt

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