Question
The following selected data were taken from the financial statements of Vidahill Inc. for December 31, 20Y7, 20Y6, and 20Y5: December 31 20Y7 20Y6 20Y5
The following selected data were taken from the financial statements of Vidahill Inc. for December 31, 20Y7, 20Y6, and 20Y5: December 31 20Y7 20Y6 20Y5 Total assets $260,000 $234,000 $208,000 Notes payable (8% interest) 90,000 90,000 90,000 Common stock 36,000 36,000 36,000 Preferred 6% stock, $100 par 18,000 18,000 18,000 (no change during year) Retained earnings 97,150 72,650 54,000 The 20Y7 net income was $25,580, and the 20Y6 net income was $19,730. 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 the return on total assets, the return on stockholders' equity, and the return on common stockholders equity for the years 20Y6 and 20Y7. Round percentages to one decimal place. 20Y7 20Y6 Return on total assets fill in the blank 1 % fill in the blank 2 % Return on stockholders equity fill in the blank 3 % fill in the blank 4 % Return on common stockholders equity fill in the blank 5 % fill in the blank 6 % b. The profitability ratios indicate that the company's profitability has . Since the rate of return on total assets is the return on stockholders' equity in both years, there must be leverage from the use of debt.
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