Stuffitt Company manufactures backpacks. During 2007 StuffittCompany issued bond

Question

Stuffitt Company manufactures backpacks. During 2007 StuffittCompany issued bonds at 10% interest and then used the cashproceeds to purchase treasury stock. The following financialinformation is available for Stuffitt Company for the years 2007and 2006.

Use the information above to calculate the following ratios forboth years: (i) return on assets ratio, (ii) return on commonstockholders' equity ratio, (iii) payout ratio, (iv) debt to totalassets ratio, (v) times interest earned ratio.

Return on assets ratio (Round to 1 decimalplace.)
2007 %
2006 %

Return on common stockholders' equity ratio (Roundto 1 decimal place.)
2007 %
2006 %

Payout ratio (Round to 1 decimalplace.)
2007 %
2006 %

Debt to total assets ratio (Round to 1 decimalplace.)
2007 %
2006 %

Times interest earned ratio (Round to 1 decimalplace.)
2007 times
2006 times

2007 2006 Sales $9,000,000 $9,000,000 Net income 2,340,000 2,700,000 Interest expense 500,000 140,000 Tax expense 670,000 780,000 Dividends paid 890,000 1,026,000 Total assets (year-end) 14,500,000 16,875,000 Average total assets 14,937,500 17,647,000 Total liabilities (year-end) 6,000,000 3,000,000 Average total stockholders' equity 9,400,000 14,100,000

Explanation / Answer

Stuffitt Company manufactures backpacks. During 2007 StuffittCompany issued bond

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