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Profitability Ratios The following selected data were taken from the financial statements of Vidahill Inc. for December 31, 2017, 20Y6, and 2015: December 31
Profitability Ratios The following selected data were taken from the financial statements of Vidahill Inc. for December 31, 2017, 20Y6, and 2015: December 31 20Y7 20Y6 20Y5 Total assets $280,000 $252,000 $224,000 Notes payable (8% interest) 90,000 90,000 90,000 Common stock 36,000 36,000 36,000 Preferred 7% stock, $100 par 18,000 18,000 18,000 (no change during year) Retained earnings 105,160 67,540 54,000 The 2017 net income was $38,880, and the 20Y6 net income was $14,800. No dividends on common stock were declared between 2015 and 2017. 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 2016 and 2017. Round percentages to one decimal place. 20Y7 20Y6 Return on total assets Return on stockholders' equity Return on common stockholders' equity % % % % % % b. The profitability ratios indicate that the company's profitability has leverage from the use of debt. . Since the rate of return on total assets is the return on stockholders' equity in both years, there must be
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