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Question 2 Carefree Company provides the following selected financial information for Year 2000 Sales $17,633 Net Income $405 Interest expense before taxes $24:5 Preferred stock dividend $27 Tax rate 35% End of 2000 S17,787 Total assets Preferred stock Common shareholders' equit Beginning of 2000 $18,048 363 5,766 6,037 (a) Calculate the ROA for Year 2000. Disaggregate ROA into the profit margin for ROA and (b) Calculate the ROCE for Year 2000. Disaggregate ROCE into the profit margin for (c) Calculate the amount of net income available to common stockholders derived from the total assets turnover components ROCE, assets turnover, and capital structure leverage components use of financial leverage with respect to creditors' capital, the amount derived from the use of preferred shareholders' capital, and the amount derived from common shareholders' capital for Year 2000. (Hint: calculate the return generated by the assets financed by debt, preferred equity, and common equity individually, then subtract the cost of the corresponding financing. Debt amount can be recovered using the balance sheet info.) (d) Did debt work to the advantage of the common shareholders in Year 2000? How about preferred stock, did it work to the advantage of the common shareholders in Year 2000

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