Solvency and Profitability Trend Analysis

Addai Company has provided the following comparative information:

	20Y8		20Y7		20Y6		20Y5		20Y4
Net income	$273,406		$367,976		$631,176		$884,000		$800,000
Interest expense	616,047		572,003		528,165		495,000		440,000
Income tax expense	31,749		53,560		106,720		160,000		200,000
Total assets (ending balance)	4,417,178		4,124,350		3,732,443		3,338,500		2,750,000
Total stockholders equity (ending balance)	3,706,557		3,433,152		3,065,176		2,434,000		1,550,000
Average total assets	4,270,764		3,928,396		3,535,472		3,044,250		2,475,000
Average total stockholders' equity	3,569,855		3,249,164		2,749,588		1,992,000		1,150,000

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	28%
Return on stockholders equity	18%
Times interest earned	2.7
Ratio of liabilities to stockholders equity	0.4

Required:

1. Determine the following for the years 20Y4 through 20Y8 for each of the graphs below. Use the amounts given above in your calculations. Round to one decimal place:

a. Return on total assets:

20Y8	fill in the blank 1%
20Y7	fill in the blank 2%
20Y6	fill in the blank 3%
20Y5	fill in the blank 4%
20Y4	fill in the blank 5%

b. Return on stockholders' equity:

20Y8	fill in the blank 6%
20Y7	fill in the blank 7%
20Y6	fill in the blank 8%
20Y5	fill in the blank 9%
20Y4	fill in the blank 10%

c. Times interest earned:

20Y8	fill in the blank 11
20Y7	fill in the blank 12
20Y6	fill in the blank 13
20Y5	fill in the blank 14
20Y4	fill in the blank 15

d. Ratio of liabilities to stockholders' equity:

20Y8	fill in the blank 16
20Y7	fill in the blank 17
20Y6	fill in the blank 18
20Y5	fill in the blank 19
20Y4	fill in the blank 20

2. Refer to the selected industry ratios provided above.