The following financial information is for A. Galler Company for 2009, 2008, and 2007:

Required
a. For 2009, 2008, and 2007, determine the following:
1. Return on assets (using end-of-year total assets)
2. Return on investment (using end-of-year long-term liabilities and equity)
3. Return on total equity (using ending total equity)
4. Return on common equity (using ending common equity)
b. Discuss the trend in these profit figures.
c. Discuss the benefit from the use of long-term debt and preferredstock.

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2009 2008 2007 Income before interest Interest expense Income before tax Tax Net income $4,400,000 800,000 3,600,000 1,500,000 $2,100,000 $4,000,000 600,000 3,400,000 1,450,000 $1,950,000 $3,300,000 550,000 2,750,000 1,050,000 $1.700,000 2008 2007 Current liabilities Long-term debt Preferred stock (14%) Common equity 2,600,000 7,000,000 100,000 $10,000,000 $2,300,000 6,200,000 $2,200,000 5,800,000 100,000 100,000 9,000,000 8,300,000