(Learning Objective 6: Evaluating profitability) Carolina Atlantic Company included the following items in its financial statements for 20X7, the current year (amounts in millions):
|
Payment of long term debt |
$17,055 |
Dividends paid |
$ 225 |
|
Proceeds from issuance of common stock |
8,425 |
Interest expense: |
|
|
Total liabilities: |
Current year |
1,437 |
|
|
Current year end |
32,320 |
Preceding year |
597 |
|
Preceding year end |
38,023 |
Net income: |
|
|
Total stockholders’ equity: |
23,478 |
Current year |
1,882 |
|
Current year end |
14,048 |
Preceding year |
2,001 |
|
Preceding year end |
6,582 |
Operating income: |
|
|
Borrowings |
Current year |
4,884 |
|
|
Preceding year |
4,012 |
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Compute Carolina Atlantic’s return on assets and return on common equity during 20X7 (the current year). Carolina Atlantic has no preferred stock outstanding. Do the company’s rates of return look strong or weak? Give your reason.