Profitability Ratios The following selected data were taken from the financial statements of Vidahill Inc....
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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 20YS: December 31 20Y7 20YG 20YS $166,000 70,000 28,000 14,000 Total assets Notes payable (8% interest) Common stock Preferred 3% stock, $100 par $208,000 70,000 28,000 14,000 $187,000 70,000 28,000 14,000 (no change during year) Retained earmings The 20Y7 net income was $26,575, and the 20Y6 net income was $10,650. No dividends on common stock were declared between 20YS and 20Y7. Preferred dividends were declared and paid in full in 20Y6 and 20Y a. Determine the return on total assets, the return on stockholders' equity, and the return on common stockholders' equity for the years 20Y6 and 20Y7. Round percentages to one decimal place. 78,385 52,230 42,000 20Y7 20Y6 Return on total assets Return on stockholders' equity Return on common stockholders' equity b. The profitability ratios indicate that the company's profitability has Since the rate of return on total assets is the return on stockholders' equity in both years, there must be leverage from the use of debt
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