Reference no: EM131798035

Problem 11-7A Cepeda Company manufactures backpacks. During 2014, Cepeda issued bonds at 12% interest and used the cash proceeds to purchase treasury stock. The following financial information is available for Cepeda Company for the years 2014 and 2013.

	2014	2013
Sales revenue	24291000	24291000
Net income	6045760	6747500
Interest expense	917500	256900
Tax expense	1808330	2024250
Dividends paid on common stock	1633150	1882710
Dividends paid on preferred stock	550500	550500
Total assets (year-end)	39135500	45545625
Average total assets	28786563	32595105
Total liabilities (year-end)	11010000	5505000
Avg. total common stockholders' equity	17249000	25873500

(a) Use the information above to calculate the following ratios for both years: (Round answers to 1 decimal place, e.g. 12.5% or 12.5.)

(i) Return on assets

(ii) Return on common stockholders' equity

(iii) Payout ratio

(iv) Debt to assets ratio

(v) Times interest earned