The following accounts and related balances of Etse Manufacturing Inc. are arranged in no particular order:

Accounts Payable ............................................................... $ 36,000

Retained Earnings ........................

Common Shares, Accounts Receivable, net ....................... 100,000

100,000 shares Preferred Shares, $0.15

authorized, 33,000 shares 25,000 shares authorized,

issued and outstanding ........... .................................. 165,000

Dividends Payable ............................................................... 4,500

Total assets, Dec. 31, 2016 ................................................. 567,500

Net income ........................................................................ 140,750

Equity, Dec. 31, 2016 ...................................................... 520,000

Prepaid Expenses ............................................................. 15,500

Interest Expense .............................................................. 10,850

Accrued Liabilities ........................................................... $ 23,000

Long-term Note Payable ................................................. 100,500

Property, Plant, and

Common Shareholders' Equipment, net ......................... 381,000

Patent, net ......................................................................... 37,000

6,000 shares issued ............................................................ 30,000

Cash ................................................................................. 35,000

Inventory .......................................................................... 190,500

Required

1. Prepare the company's classified balance sheet in the report format at December 31,

2017.

2. Compute the rate of return on total assets and the rate of return on common shareholders' equity for the year ended December 31, 2017.

3. Do these rates of return suggest strength or weakness? Give your reason.