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Trend Analysis Critelli Company has provided the following comparative information:     Year 5     Year 4     Year 3...

Trend Analysis

Critelli Company has provided the following comparative information:

    Year 5     Year 4     Year 3     Year 2     Year 1
Net income $1,052,000 $906,900 $762,100 $651,400 $552,000
Interest expense 357,700 326,500 282,000 215,000 171,100
Income tax expense 336,640 253,932 213,388 169,364 132,480
Average total assets 6,350,000 5,606,364 4,789,450 4,067,606 3,459,809
Average stockholders' equity 2,169,072 1,941,970 1,697,327 1,504,388 1,317,422

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:

  Industry Ratios
Return on total assets 21.9 %
Return on stockholders’ equity 45.3 %
Times interest earned 4.6

Instructions:

Calculate three ratios for Year 1 through Year 5. Round to one decimal place.

a. Return on total assets:

Year 5 %
Year 4 %
Year 3 %
Year 2 %
Year 1 %

b. Return on stockholders’ equity:

Year 5 %
Year 4 %
Year 3 %
Year 2 %
Year 1 %

c. Times interest earned:

Year 5
Year 4
Year 3
Year 2
Year 1

Solutions

Expert Solution

ekkarill92 answered 2 years ago
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