Question

eBook Show Me How Calculator Print Item Profitability Ratios The following selected data were taken from the financial statements of Vidahill Inc. for December 31, 2017, 2016, and 2015: December 31 2017 2016 20YS Total assets $5,200,000 $5,000,000 $4,800,000 Notes payable (6% Interest) 2,500,000 2,500,000 2,500,000 Common stock 250,000 250,000 250,000 Preferred 2.5% stock, $100 par (no change during year) 500,000 500,000 500,000 Retained earnings 1,574,000 1,222,000 750,000 The 2017 net income was $411,000, and the 2016 net income was $462,500. No dividends on common stock were declared between 2015 and 2047. Preferred dividends were declared and paid in full in 2016 and 2017. a. Determine the return on total assets, the return on stockholders' equity, and the return on common stockholders' equity for the years 2046 and 2077. Round percentages to one decimal place. 2017 2016 Return on total assets 8.1 X % 9.4 X % Return on stockholders' equity 19.1 % 26.6 % Return on common stockholders' equity 24.2 % 36.4 % b. The profitability ratios indicate that the company's profitability has deteriorated ✓ . Because the return on common stockholders' equity exceeds on total assets in both years, there is positive leverage from the use of debt. the return Feedback Check My Won Check My Work Previous Next All work saved. Email Instructor Save and Exit Submit Assignment for Grading

Just need the return on total assets

Answer 1

	20Y7	20Y6
Net income	411000	462500
Add: Interest on notes payable	150000	150000
Income before interest expense	561000	612500

Return on total assets = Income before interest expense/Average total assets
Return on total assets:
20Y7	11.0%	=561000/((5200000+5000000)/2)
20Y6	12.5%	=612500/((4800000+5000000)/2)