Evaluating profitability
|
2012 |
2011 |
|
|
Income Statement—partial: |
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|
Interest expense |
12,400,000 |
17,400,000 |
|
Net Income |
17,900,000 |
19,100,000 |
|
2012 |
2011 |
|
|
Balance Sheet—partial: |
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|
Total assets |
$ 328,000,000 |
$ 318,000,000 |
|
Preferred stock, $2, no-par, 150,000 shares authorized, issued and outstanding |
$ 2,400,000 |
$ 2,400,000 |
|
Common stockholders’ equity |
178,000,000 |
171,000,000 |
|
Retained earnings |
4,000,000 |
3,000,000 |
|
Total stockholders’ equity |
$ 184,400,000 |
$ 176,400,000 |
Requirements
1.Compute rate of return on total assets and rate of return on common stockholders’ equity for 2012.
2.Do these rates of return suggest strength or weakness? Give your reason.