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2014 $595,000 184,500 182,546 142,800 4,065,828 1,241,922 3,802,439 1,451,220 4.6 Solvency and Profitability Trend Analysis Addai Company has provided the following comparative information: 2018 2017 2016 2015 Net income $1,134,000 $977,600 $821,500 $702,100 Interest expense 385,600 351,900 304,000 231,700 Income tax expense 362,880 273,728 230,020 Total assets (ending balance) 6,788,258 7,153,026 5,157,160 5,361,532 Total stockholders' equity (ending balance) 2,159,930 2,604,776 1,664,220 2,069,870 Average total assets 6,970,642 6,155,093 5,259,346 4,467,943 Average stockholders' equity 2,382,353 2,134,498 1,867,045 1,655,896 You have been asked to evaluate the historical performance of the company over the last five years. Selected industry ratios have remained relatively steady at the following levels for the last five years: 2014-2018 Return on total assets 21.5% Return on stockholders' equity 44.4% Times interest earned Ratio of liabilities to stockholders' equity Required: 1. Determine the following for the years 2014 through 20Y8. Round to one decimal place: a. Return on total assets: 20Y8 % 2017 2046 2045 2074 b. Return on stockholders' equity: 20Y8 2017 2046 2045 2014 C. Times interest earned: 2.1 % % % % % % % % % % % 2018 2017 2046 lllll 20YS 2014 d. Ratio of liabilities to stockholders' equity 2018 2017 2016 20Y5 2014 2. Refer to the selected industry ratios provided above. Both the rate earned on total assets and the rate earned on stockholders' equity have been moving in a direction in the last five years. Both measures have moved the industry average over the last two years. The cause of this change is driven by a rapid in earnings

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