EXERCISE 15-19

# EXERCISE 15-19 - EXERCISE 15-19(2025 minutes(a Wilder...

This preview shows pages 1–2. Sign up to view the full content.

(a) Wilder Company is the more profitable in terms of rate of return on total assets. This may be shown as follows: Wilder Company \$720,000 \$4,200,000 = 17.14% Ingalls Company \$648,000 \$4,200,000 = 15.43% It should be noted that these returns are based on net income related to total assets, where the ending amount of total assets is considered representative. If the rate of return on total assets uses net income before interest but after taxes in the numerator, the rates of return on total assets are the same as shown below: Wilder Company \$720,000 \$4,200,000 = 17.14% \$648,000 + \$120,000 – \$48,000 \$720,000 Ingalls Company \$4,200,000 = \$4,200,000 = 17.14% EXERCISE 15-19 (Continued) (b) Ingalls Company is the more profitable in terms of return on stockholder’ equity. This may be shown as follows: Ingalls Company \$648,000 \$2,700,000 = 24% Wilder Company \$720,000 \$3,600,000 = 20% (Note to instructor: To explain why the difference in rate of return on assets

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

## This note was uploaded on 01/31/2011 for the course ACCT 302 taught by Professor Leee during the Spring '10 term at Grand Rapids Community College.

### Page1 / 3

EXERCISE 15-19 - EXERCISE 15-19(2025 minutes(a Wilder...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online