Question
Solvency and Profitability Trend Analysis Itzkoff Company has provided the following comparative information: 2016 2015 2014 2013 2012 Net income $1,352,000 $1,165,500 $979,400 $837,100 $709,400
Solvency and Profitability Trend Analysis
Itzkoff Company has provided the following comparative information:
2016 | 2015 | 2014 | 2013 | 2012 | ||||||
Net income | $1,352,000 | $1,165,500 | $979,400 | $837,100 | $709,400 | |||||
Interest expense | 459,700 | 419,600 | 362,400 | 276,200 | 219,900 | |||||
Income tax expense | 432,640 | 326,340 | 274,232 | 217,646 | 170,256 | |||||
Total assets (ending balance) | 9,399,341 | 9,977,129 | 7,159,087 | 7,505,393 | 5,691,590 | |||||
Total stockholders' equity (ending balance) | 2,943,160 | 3,604,056 | 2,297,210 | 2,898,546 | 1,739,128 | |||||
Average total assets | 9,688,235 | 8,568,108 | 7,332,240 | 6,254,494 | 5,340,805 | |||||
Average stockholders' equity | 3,273,608 | 2,950,633 | 2,597,878 | 2,318,837 | 2,044,380 |
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:
20122016 | ||
Rate earned on total assets | 18.4% | |
Rate earned on stockholders' equity | 38.1% | |
Number of times interest charges are earned | 4.6 | |
Ratio of liabilities to stockholders' equity | 2.1 |
Required:
1. Determine the following for the years 2012 through 2016. Round to one decimal place:
a. Rate earned on total assets:
2016 | % |
2015 | % |
2014 | % |
2013 | % |
2012 | % |
b. Rate earned on stockholders' equity:
2016 | % |
2015 | % |
2014 | % |
2013 | % |
2012 | % |
c. Number of times interest charges are earned:
2016 | |
2015 | |
2014 | |
2013 | |
2012 |
d.
Ratio of liabilities to stockholders' equity
:
2016 | |
2015 | |
2014 | |
2013 | |
2012 |
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