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Profitability Ratios Total assets The following selected data were taken from the financial statements of Vidahill Inc. for December 31, 2017, 2086, and 20Y5: December
Profitability Ratios Total assets The following selected data were taken from the financial statements of Vidahill Inc. for December 31, 2017, 2086, and 20Y5: December 31 2017 2016 2015 $254,000 $229,000 $204,000 Notes payable (8% interest) 80,000 80,000 80,000 Common stock 32,000 32,000 32,000 Preferred 3% stock, $100 par 16,000 16,000 16,000 (no change during year) Retained earnings 100,240 67,665 48,000 The 2017 net income was $33,055, and the 2016 net income was $20,145. No dividends on common stock were declared between 20Y5 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. 2017 2016 Return on total assets 0.081 X % 0.10 X % Return on stockholders' equity 0.08 X % % Return on common stockholders' equity % b. The profitability ratios indicate that the company's profitability has improved . Since the rate of return on total assets is less than the return on stockholders' equity in both years, there must be positive leverage from the use of debt. %
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