Crosby Company has provided the following comparative information: You have been
ID: 2542283 • Letter: C
Question
Crosby Company has provided the following comparative information:
You have been asked to evaluate the historical performance of the company over the last five years.
Selected industry ratios have remained relatively steady at the following levels for the last five years:
Required:
1. Determine the following for the years 20Y4 through 20Y8 for each of the graphs below. Use the amounts given above in your calculations. Round to one decimal place.
a. Return on total assets:
b. Return on stockholders’ equity:
c. Times interest earned:
d. Ratio of liabilities to stockholders' equity:
20Y8 20Y7 20Y6 20Y5 20Y4 Net income $5,571,720 $3,714,480 $2,772,000 $1,848,000 $1,400,000 Interest expense 1,052,060 891,576 768,600 610,000 500,000 Income tax expense 1,225,572 845,222 640,320 441,600 320,000 Total assets (ending balance) 29,378,491 22,598,839 17,120,333 12,588,480 10,152,000 Total stockholders’ equity (ending balance) 18,706,200 13,134,480 9,420,000 6,648,000 4,800,000 Average total assets 25,988,665 19,859,586 14,854,406 11,370,240 8,676,000 Average total stockholders' equity 15,920,340 11,277,240 8,034,000 5,724,000 4,100,000Explanation / Answer
Part 1 - Calculation of return on total assets
= Net Income/Average Assets*100
Part 2 - Calculation of Return on stockholder's equity
= Net Income/Average stockholder's equity
Part 3 - Calculation of Times Interest Earned
= (Net Income + Interest + Tax)/Interest
Part 4 - Calculation of Liabilities to stockholders's Equity
= (Assets - Stockholder's Equity)/Stockholder's equity
Year Return on total assets 20Y8 ($5571720/$25988665)*100 21.44% 20Y7 ($3714480/$19859586)*100 18.70% 20Y6 ($2772000/$14854406)*100 18.66% 20Y5 ($1848000/$11370240)*100 16.25% 20Y4 ($1400000/$8676000)*100 16.14%Related Questions
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