Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The following selected data were taken from the financial statements of Vidahill Inc. for December 31, 2017, 2016, and 20Y5: December 31 2017 2016 2015

image text in transcribed

The following selected data were taken from the financial statements of Vidahill Inc. for December 31, 2017, 2016, and 20Y5: December 31 2017 2016 2015 Total assets $292,000 $263,000 $234,000 Notes payable (8% interest) 100,000 100,000 100,000 Common stock 40,000 40,000 40,000 Preferred 3% stock, $100 par 20,000 20,000 20,000 (no change during year) Retained earnings 113,600 74,250 60,000 The 2017 net income was $39,950, and the 20Y6 net income was $14,850. No dividends on common stock were declared between 2015 and 2017. Preferred dividends were declared and paid in full in 2016 and 2047. a. Determine the return on total assets, the return on stockholders' equity, and the return on common stockholders' equity for the years 2046 and 2047. Round percentages to one decimal place. 2017 2016 % % 12.98 % 5.84 % Return on total assets 17.28 9.20 Return on stockholders' equity Return on common stockholders' equity 14.69 b. The profitability ratios indicate that the company's profitability has improved Since the rate of return on total assets is less than return on stockholders' equity in both years, there must be positive leverage from the use of debt. % 6.65 % the

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions

Question

that the value of a sample statistic varies from sample to sample.

Answered: 1 week ago