XC Accounting question | Cheg return on stockholders equi ?-SI -d WileyPLUS KO n
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XC Accounting question | Cheg return on stockholders equi ?-SI -d WileyPLUS KO nhttps/edugen.wileyplus.com/ed v uni WileyPLUS Kimmel, Financial Accounting, 8e FINANCIAL ACCOUNTING (ACCT 221) Home Read. Study & Practice Gradebook ORION Downloadable eTextbook CALCULATOR MESSAGE HY PRINTER VERSION $18.900,000 $18.900,000 5,250,000 161,000 1.575,000 1,179,900 345,000 30,450,000 33,437,500 18,040.62? 20,427,450 6,900,000 3,450,000 10,810,000 16,215,000 ASSIGNMENT RESOURCES Salas revenue Net income ntarast expanse Tax expense Dividends paid on common stock Dividends paid on preferrad stock Totel assets (yeerend Avarage total aasats Total liabilities (yeer-end) Avg, total common stockholders' equity 4,704,000 5 575,000 1.407,000 1,023,500 345,000 Exerciee 11-9 Revicw Results by Use the information above to calculate the following ratios for both years; (Round ?nswers to 1 decimal place, e.g. 12.5% or 12.5.) 2017 2016 (1) Return on assets (2) Return on common stockholders equity (3) Payout ratio 4) Debt to assets ratio (5) Times interest eerned 3.8 3.9 % 2.3 % 3.0 % times times LINK TO TEXT 1:53 PM O Type here to search 418/2018Explanation / Answer
Solution:
1) Return on assets:
2017 = Net Income / Average Total Assets = 4704000/ 18040625 *100 = 26.1%
2016 = 5250000/ 20427450 *100 = 25.7%
2) Return on Common Stockholders' equity :
Return on common shareholders' equity = (Net income- Preferred Dividend) / Average total common shareholders' equity
2017 = (4704000-345000) / 10810000 = 40.3%
2016 = (5250000 -345000) / 16215000 = 30.2%
3) Payout ratio:
Payout Ratio = Dividend Paid / Net Income
2017 = (1023500-345000) / 4704000 = 29.1%
2016 = (1179900+345000)/ 5250000 = 29.0%
4) Debt to assets Ratio
Debt to assets ratio = Total liabilities / total assets
2017 = 6,900,000 / 30,450,000 = 22.6%
2016= 3,450,000 / 35,437,500 = 9.7%
5)Times Interest Earned:
Times Interest Earned = EBIT / Interest expense
EBIT 2017 = Net Income + Interest expense + Tax Expense = 4,704,000 + 575,000+ 1,407,000 = $ 6,686000
EBIT 2016 = 5,250,000 +161,000 + 1,575,000 = $6,986,000
Times Interest Earned 2017 = 6,686000/ 575000 = 11.6 times
Times Interest Earned 2016 = 6,986,000 / 161000 = 43.4 times
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