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Profitability ratios The following selected data were taken from the financial statements of Vidahill Inc. for December 31, 2017, 2016, and 2015: December 31 December 31 December 31 2017 2016 2015 $225,000 $182,000 80,000 80,000 32,000 32,000 Total assets Notes payable (8% interest) Common stock Preferred 5% stock, $100 par (no change during year) Retained earnings 16,000 16,000 60,430 48,000 The 2017 net income was $17,800, and the 2016 net income was $13,230. No dividends on common stock were declared between 2015 and 2017. Preferred dividends were declared and paid in full in 2016 and 2017. 16,000 77,430 $204,000 80,000 32,000 a. Determine the return on total assets, the return on stockholders' equity, and the return on common stockholders' equity for the years 2016 and 2017. When required, round your answers to one decimal place. Return on total assets Return on stockholders' equity Return on common stockholders' equity 2017 8.3 X % 15.22 % 5.6 X % b. The profitability ratios indicate that the company's profitability has improved stockholders' equity in both years, there must be positive Check My Work 20Y6 6.9 X % 12.94 % -8.66 X % ✔. Since the return on assets is less than ✓ leverage from the use of debt. ✓the return on Previous Next

Profitability ratios The following selected data were taken from the financial statements of Vidahill Inc. for December 31, 2017, 2016, and 2015: December 31 December 31 December 31 2017 2016 2015 $225,000 $182,000 80,000 80,000 32,000 32,000 Total assets Notes payable (8% interest) Common stock Preferred 5% stock, $100 par (no change during year) Retained earnings 16,000 16,000 60,430 48,000 The 2017 net income was $17,800, and the 2016 net income was $13,230. No dividends on common stock were declared between 2015 and 2017. Preferred dividends were declared and paid in full in 2016 and 2017. 16,000 77,430 $204,000 80,000 32,000 a. Determine the return on total assets, the return on stockholders' equity, and the return on common stockholders' equity for the years 2016 and 2017. When required, round your answers to one decimal place. Return on total assets Return on stockholders' equity Return on common stockholders' equity 2017 8.3 X % 15.22 % 5.6 X % b. The profitability ratios indicate that the company's profitability has improved stockholders' equity in both years, there must be positive Check My Work 20Y6 6.9 X % 12.94 % -8.66 X % ✔. Since the return on assets is less than ✓ leverage from the use of debt. ✓the return on Previous Next

Survey of Accounting (Accounting I)
Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter9: Metric-analysis Of Financial Statements
Section: Chapter Questions
Problem 9.17E: Profitability metrics The following selected data were taken from the financial statements of The...
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Profitability ratios The following selected data were taken from the financial statements of Vidahill Inc. for December 31, 2017, 2016, and 2015: December 31 December 31 December 31 20Y7 20Y6 20Y5 $225,000 $204,000 80,000 80,000 32,000 32,000 Total assets Notes payable (8% interest) Common stock Preferred 5% stock, $100 par (no change during year) Retained earnings 16,000 77,430 16,000 60,430 Check My Work $182,000 80,000 32,000 The 2017 net income was $17,800, and the 20Y6 net income was $13,230. No dividends on common stock were declared between 2015 and 2017. Preferred dividends were declared and paid in full in 2016 and 2017. 16,000 48,000 a. Determine the return on total assets, the return on stockholders' equity, and the return on common stockholders' equity for the years 2016 and 2017. When required, round your answers to one decimal place. 2017 8.3 X % 15.22 ✔% 5.6 X % 20Y6 6.9 X % 12.94% -8.66 X % Return on total assets Return on stockholders equity Return on common stockholders' equity b. The profitability ratios indicate that the company's profitability has improved stockholders' equity in both years, there must be positive ✓. Since the return on assets is less than i ✓ leverage from the use of debt. ✓the return on Previous Next
Transcribed Image Text:Profitability ratios The following selected data were taken from the financial statements of Vidahill Inc. for December 31, 2017, 2016, and 2015: December 31 December 31 December 31 20Y7 20Y6 20Y5 $225,000 $204,000 80,000 80,000 32,000 32,000 Total assets Notes payable (8% interest) Common stock Preferred 5% stock, $100 par (no change during year) Retained earnings 16,000 77,430 16,000 60,430 Check My Work $182,000 80,000 32,000 The 2017 net income was $17,800, and the 20Y6 net income was $13,230. No dividends on common stock were declared between 2015 and 2017. Preferred dividends were declared and paid in full in 2016 and 2017. 16,000 48,000 a. Determine the return on total assets, the return on stockholders' equity, and the return on common stockholders' equity for the years 2016 and 2017. When required, round your answers to one decimal place. 2017 8.3 X % 15.22 ✔% 5.6 X % 20Y6 6.9 X % 12.94% -8.66 X % Return on total assets Return on stockholders equity Return on common stockholders' equity b. The profitability ratios indicate that the company's profitability has improved stockholders' equity in both years, there must be positive ✓. Since the return on assets is less than i ✓ leverage from the use of debt. ✓the return on Previous Next
Ratio of liabilities to stockholders' equity and times interest earned The following data were taken from the financial statements of Hunter Inc. for December 31 of two recent years: Previous Year Current Year Accounts payable $366,000 Current maturities of serial bonds payable 240,000 Serial bonds payable, 10% 1,020,000 Common stock, $1 par value 50,000 Paid-in capital in excess of par 600,000 Retained earnings 2,060,000 The income before income tax expense was $327,600 and $286,600 for the current and previous years, respectively. a. Determine the ratio of liabilities to stockholders' equity at the end of each year. Round your answers to one decimal place. Current year 0.6 ✔ Previous year 0.7 ✔ b. Determine the times interest earned ratio for both years. Round your answers to one decimal place. Current year Previous year c. The ratio of liabilities to stockholders' equity has improved previous year. These results are the combined result of a larger compared to the previous year. Check My Work 4.2 X $110,000 240,000 1,260,000 70,000 600,000 1,630,000 3.3 X and the number of times bond interest charges were earned has improved income before income taxes and lower ✔from the ✔ interest expense in the current year Previous Neyt
Transcribed Image Text:Ratio of liabilities to stockholders' equity and times interest earned The following data were taken from the financial statements of Hunter Inc. for December 31 of two recent years: Previous Year Current Year Accounts payable $366,000 Current maturities of serial bonds payable 240,000 Serial bonds payable, 10% 1,020,000 Common stock, $1 par value 50,000 Paid-in capital in excess of par 600,000 Retained earnings 2,060,000 The income before income tax expense was $327,600 and $286,600 for the current and previous years, respectively. a. Determine the ratio of liabilities to stockholders' equity at the end of each year. Round your answers to one decimal place. Current year 0.6 ✔ Previous year 0.7 ✔ b. Determine the times interest earned ratio for both years. Round your answers to one decimal place. Current year Previous year c. The ratio of liabilities to stockholders' equity has improved previous year. These results are the combined result of a larger compared to the previous year. Check My Work 4.2 X $110,000 240,000 1,260,000 70,000 600,000 1,630,000 3.3 X and the number of times bond interest charges were earned has improved income before income taxes and lower ✔from the ✔ interest expense in the current year Previous Neyt
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