The following selected data were taken from the financial statements of Vidahill Inc. for December 31, 20Y7, 20Y6, and 20Y5:

December 3120Y720Y620Y5Total assets$5,200,000$5,000,000$4,800,000Notes payable (6% interest)2,500,0002,500,0002,500,000Common stock250,000250,000250,000Preferred 2.5% stock, $100 par(no change during year)500,000500,000500,000Retained earnings1,574,0001,222,000750,000The 20Y7 net income was $411,000, and the 20Y6 net income was $462,500. No dividends on common stock were declared between 20Y5 and 20Y7. Preferred dividends were declared and paid in full in 20Y6 and 20Y7.

a.Determine thereturn on total assets, thereturn on stockholders' equity, and thereturn on common stockholders' equityfor the years 20Y6 and 20Y7. Round percentages to one decimal place.

20Y720Y6Return on total assets%%Return on stockholders' equity%%Return on common stockholders' equity%%b.The profitability ratios indicate that the company's profitability hasdeteriorated

. Because the return on common stockholders' equityexceeds

the return on total assets in both years, there ispositive

leverage from the use of debt.