Solvency and Profitability Trend Analysis

Addai Company has provided the following comparative information:

	20Y8		20Y7		20Y6		20Y5		20Y4
Net income	$973,200		$839,000		$705,000		$602,600		$510,700
Interest expense	330,900		302,000		260,900		198,900		158,300
Income tax expense	311,424		234,920		197,400		156,676		122,568
Total assets (ending balance)	7,595,991		8,116,057		5,798,577		6,126,115		4,645,637
Total stockholders' equity (ending balance)	2,334,668		2,897,590		1,842,522		2,353,906		1,412,344
Average total assets	7,856,024		6,957,317		5,962,346		5,105,096		4,372,549
Average stockholders' equity	2,616,129		2,370,056		2,098,214		1,883,125		1,668,954

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	16.3%
Return on stockholders equity	34%
Times interest earned	4.6
Ratio of liabilities to stockholders' equity	2.1

1. Determine the following for the years 2014 through 2048. Round to one decimal place: > a. Return on total assets: 20Y8 % 2017 % 20Y6 % 20Y5 % 2014 % b. Return on stockholders' equity: 20Y8 % 2017 % 2016 % 2015 % 2014 % C. Times interest earned: 20Y8 2017 2016 20Y5 2014 d. Ratio of liabilities to stockholders' equity: 20Y8 2017 2016 20Y5 2014 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 direction in the last five years. Both measures have moved the industry average over the last two years. The cause of this change is driven by a rapid in earnings