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.

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Definitions:

Albert Bandura

A psychologist best known for his work on social learning theory and the concept of self-efficacy.

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Systems within biological organisms used to maintain homeostasis, where the output of a process influences the operation of the process itself, either enhancing it (positive feedback) or suppressing it (negative feedback).

Subculture

A segment of the wider society that holds distinct opinions or practices diverging from the majority's cultural standards.

Rationalization

The process of replacing traditional and emotional thought patterns with more goal-oriented, efficient, and logical ones, often associated with the development of bureaucracies and industrialization.