Question
The following selected data were taken from the financial statements of Squiggle Group Inc. for December 31, 2016, 2015 and 2014: December 31 2016 2015
The following selected data were taken from the financial statements of Squiggle Group Inc. for December 31, 2016, 2015 and 2014:
December 31 | |||||||
2016 | 2015 | 2014 | |||||
Total assets | $249,000 | $224,000 | $199,000 | ||||
Notes payable (10% interest) | 80,000 | 80,000 | 80,000 | ||||
Common stock | 32,000 | 32,000 | 32,000 | ||||
Preferred 6% stock, $100 par | 16,000 | 16,000 | 16,000 | ||||
(no change during year) | |||||||
Retained earnings | 102,010 | 70,765 | 48,000 |
The 2016 net income was $32,205, and the 2015 net income was $23,725. No dividends on common stock were declared between 2014 and 2016.
a. Determine the A measure of profitability of assets, without regard to the portion of assets financed by creditors or stockholders.rate earned on total assets, the A measure of profitability computed by dividing net income by average stockholders' equity.rate earned on stockholders' equity, and the A measure of profitability computed by dividing net income, reduced by preferred dividend requirements, by average common stockholders' equity.rate earned on common stockholders' equity for the years 2015 and 2016. When required, round to one decimal place.
2016 | 2015 | |||
Rate earned on total assets | % | % | ||
Rate earned on stockholders' equity | % | % | ||
Rate earned on common stockholders' equity | % | % |
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