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Solvency and profitability trend analysis Addal Company has provided the following comparative Information: Net income Interest expense Income tax expense Total assets (ending balance)
Solvency and profitability trend analysis Addal Company has provided the following comparative Information: Net income Interest expense Income tax expense Total assets (ending balance) Total stockholders' equity (ending balance) Average total assets Average total stockholders' equity 2018 2017 2014 20Y6 20Y5 $273,406 $367,976 $631,176 $884,000 $800,000 616,047 572,003 528,165 495,000 440,000 31,749 53,560 106,720 160,000 200,000 4,417,178 4,124,350 3,732,443 3,338,500 2,750,000 3,706,557 3,433,152 3,065,176 2,434,000 1,550,000 4,270,764 3,928,397 3,535,472 3,044,250 2,475,000 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: 2014-2018 Return on total assets 28% Return on stockholders' equity 18% Times interest earned 2.7 Ratio of liabilities to stockholders' equity 0.4 Required: Required: 1. Determine the following for the years 2014 through 2018 for each of the graphs below. Use the amounts given above in your calculations. Round to one decimal place a. Return on total assets: 2018 2017 2016 2015 2014 96 b. Return on stockholders' equity 2018 2017 2016 2015 2014 c. Times interest earned: 2018 2017 2016 2015 2014 00000 % % 2. Refer to the selected industry ratios provided above. Both the return on total assets and the return on stockholders' equity have been moving in al the industry average over the last two years. The cause of this decline is driven by a rapid) over the five years. However, thel stockholders' equity has gradually earned ratio to the industry average in recent years direction in the last five years. Both measures have moved in earnings. The company's level of debt relative to In earnings along with high interest costs has caused the times interest
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