Casefor. × ssignmentMain.do?invoker-assignments&takeAssignmentSessionLocator; as
ID: 2592660 • Letter: C
Question
Casefor. × ssignmentMain.do?invoker-assignments&takeAssignmentSessionLocator; assignment-take&inprogress; faise a Show Me How Profitablity Ratios The following selected data were taken from the financial stacements of Vidahil tnc. for December 31, 20Y7, 20Y6, and 20YS: 265,00000 23,00 Total assets Notes payable (8% interest) Common stock Preferred 7% soc, S10 par 90,000 36,000 18,000 8,000 18,000 no change during year) Retained eamings 103,180 73,120 The 207 ret inceme was $31,320, and the 2096 net income was $20,380. No dividends on common declared and stock were declared between 20YS and 207. Preferred dividends were paid in full in 20Y8 a207 . Determine the return required, round to one return on common stockholders' equity for the years 20ws equty, and Return on 12.0 23.46) x on comman 31.03 x eeuty in bwth years, there must be pealitiveeverage from the use of debe 5 0Explanation / Answer
Return on stockholders’ equity2017 = Net income/stockholders equity
= 31320/(36000 + 18000 + 103180)
= 31320/ 157180
= 0.199 or 20 %
Return on stockholders’ equity2016 = 20380/(36000 + 18000 +73120)
= 20380/127120
= 0.1603 or 16.03%
Return on common stock2017 = net income/common stock
= 31320/36000
= 0.87 or 87%
Return on common stock2016 =20380/36000
= 0.5661 or 56.61%
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