Willingham Company manufactures raingear. During 2010 Willingham Company decided to issue bonds at 8% interest and then used the cash to purchase a significant amount of treasury stock. The following information is available for Willingham Company.

Instructions
(a) Use the information above to calculate the following ratios for both years: (i) return on assets ratio, (ii) return on common stockholders' equity ratio, (iii) payout ratio, (iv) debt to total assets ratio, (v) times interest earned ratio.
(b) Referring to your findings in part (a), discuss the changes in the company's profitability from 2009 to 2010.
(c) Referring to your findings in part (a), discuss the changes in the company's solvency from 2009 to 2010.
(d) Based on your findings in (b), was the decision to issue debt to purchase common stock a wiseone?

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2009 $3,000,000 2010 Sales Net incomc Interest expense Tax expense Total asscts Average total assets Total liabilities Average total stockholders equity Dividends $3,000,000 780,000 120,000 166,000 5,000,000 5,312,500 2,000,000 3,312,500 270,000 850,000 50,000 200,000 5,625,000 6,250,000 1,200,000 5,250,000 300,000