Profitability Ratios

The following selected data were taken from the financial statements of Vidahill Inc. for December $31,20$Y$7,20$Y$6,$ and $20$Y$5$:

The $20Y7$ net income was $$19,800,$ and the $20Y6$ net income was $$10,290.$ No dividends on common stock were declared between $20Y5$ and $20Y7.$ Preferred dividends were declared and paid in full in $20Y6$ and $20Y.$

a$.$ Determine the return on total assets, the rate earned on stockholders' equity, and the return on common stockholders' equity for the years $20Y6$ and $20Y7.$ When required, round to one decimal place.

b$.$ The profitability ratios indicate that Vidahill Inc.$\text{'}$s profitability has

$.$ Since the rate of return on assets is

the return on stockholders' equity in both years, there must be

leverage from the use of debt.