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Carridine Company Reported Net Income of $1,903 on Revenues of $55,618

question 33

Essay

Carridine Company reported net income of $1,903 on revenues of $55,618 for Year 4.Interest expense totaled $459,and preferred dividends totaled $13.5.Average total assets for Year 4 were $17,500.The income tax rate is 40 percent.Average preferred shareholders' equity totaled $250,and average common shareholders' equity totaled $7,500.Assume that all the following amounts are in thousands.
REQUIRED:
a.Compute the rate of ROA.Disaggregate ROA into profit margin for ROA and assets
turnover components.
b.Compute the rate of ROCE.Disaggregate ROCE into profit margin for ROCE,assets
turnover,and capital leverage ratio components.
c.Calculate the amount of net income to common shareholders derived from the
excess return on creditors' capital,the excess return on preferred shareholders' capital,
and the return on common shareholders' capital.


Definitions:

Selection Bias

A systematic error made in choosing individuals or groups to participate in a study, leading to non-random sampling.

Economic Research

The systematic study of the economy or economic phenomena, involving the collection and analysis of data to enhance understanding of economic processes.

Selection Bias

A distortion in the statistical analysis caused by a non-random selection of data, leading to misleading conclusions.

Random Sample

A subset of individuals chosen from a larger set, where each individual has an equal chance of being selected.

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