Solvency and Profitability Trend Analysis Addai Company has provided the following comparative information: 20Y8 20Y7 20Y6 20Y5 20Y4 Net income $1,035,500 $892,700 $750,200 $641,200 $543,400 Interest expense 352,100 321,400 277,600 211,600 168,500 Income tax expense 331,360 249,956 210,056 166,712 130,416 Total assets (ending balance) 6,613,130 6,990,792 5,030,000 5,248,000 3,979,733 Total stockholders' equity (ending balance) 2,092,832 2,540,278 1,621,494 2,029,114 1,217,468 Average total assets 6,801,961 6,010,396 5,139,000 4,373,333 3,727,225 Average stockholders' equity 2,316,555 2,080,886 1,825,304 1,623,291 1,426,247 You have been asked to evaluate the historical performance of the company over the last five years. Selected industry ratios have remained relatively steady at the following levels for the last five years: 20Y420Y8 Return on total assets 20.1% Return on stockholders equity 41.5% Times interest earned 4.6 Ratio of liabilities to stockholders' equity 2.1 Required: 1. Determine the following for the years 20Y4 through 20Y8. Round to one decimal place: a. Return on total assets: 20Y8 % 20Y7 % 20Y6 % 20Y5 % 20Y4 % b. Return on stockholders equity: 20Y8 % 20Y7 % 20Y6 % 20Y5 % 20Y4 % c. Times interest earned: 20Y8 20Y7 20Y6 20Y5 20Y4 d. Ratio of liabilities to stockholders' equity: 20Y8 20Y7 20Y6 20Y5 20Y4 2. Refer to the selected industry ratios provided above. Both the rate earned on total assets and the rate earned on stockholders' equity have been moving in a positive direction in the last five years. Both measures have moved above the industry average over the last two years. The cause of this change is driven by a rapid increase in earnings.