Answered: 20Y7 20Y6 20YS Total assets $5,200,000…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Profitability ratios
The following selected data were taken from the financial statements of
Vidahill Inc. for December 31, 20Y7, 20Y6, and 20Y5:

The 20Y7 net income was $411,000, and the 20Y6 net income was
$462,500. No dividends on common stock were declared between 2045
and 2017. Preferred dividends were declared and paid in full in 2016 and
2017.
a. Determine the return on total assets, the return tin stockholders'
equity, and the return on common stockholders' equity for the years
2016 and 2017. Round percentages to one decimal place.
b. What conclusions can be drawn from these data as to the company's
profitability?

20Y7
20Y6
20YS
Total assets
$5,200,000 $5,00,000
$4,800,000
Notes payable (6% interest).
Common stock..
Preferred 2.5% stock, $100 par
2,500,000
2,500,000
2,500,000
250,000
250,000
250,000
(no change during year) .
Retained earnings..
500,000
500,000
500,000
1,574,000
1,222,000
750,000

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