The Following Information Is Available from the Balance Sheets at the End

question 32

Essay

The following information is available from the balance sheets at the end of 2016 and 2015 for Riverside Company:
Net income for 2016 and 2015 was $340,000 and $300,000, respectively. Answer the following:
A Calculate the return on common stockholders' equity ratio for 2016.
B What information is provided to users with the calculation in part A? Explain.
C What is the difference between the return on stockholders' equity ratio and the return on assets ratio?
A Net income - Preferred dividends/Average common stockholders' equity = $340,000 - $0/[$1,69

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Definitions:

Adjusted Trial Balance

A list of all accounts and their balances after adjusting entries have been made, used to prepare financial statements.

Prepaid Insurance

An asset account that represents insurance premiums paid in advance, which are expensed over the period the insurance coverage relates to.

Current Asset

Asset expected to be converted into cash, sold, or consumed within a year or within the business's operating cycle.

Liability Subsections

The divisions within the liabilities section of a balance sheet, categorizing liabilities based on their nature or duration, such as current liabilities and long-term liabilities.