Evaluate the historical performance of the company

Assignment Help Accounting Basics

Reference no: EM131123019

Crosby Company has provided the following comparative information:

	2016	2015	2014	2013	2012
Net income	$ 5,571,720	$ 3,714,480	$ 2,772,000	$ 1,848,000	$ 1,400,000
Interest expense	1,052,060	891,576	768,600	610,000	500,000
Income tax expense	1,225,572	845,222	640,320	441,600	320,000
Total assets (ending balance)	29,378,491	22,598,839	17,120,333	12,588,480	10,152,000
Total stockholders' equity (ending balance)	18,706,200	13,134,480	9,420,000	6,648,000	4,800,000
Average total assets	25,988,665	19,859,586	14,854,406	11,370,240	8,676,000
Average total stockholders' equity	15,920,340	11,277,240	8,034,000	5,724,000	4,100,000

You have been asked to evaluate the historical performance of the company over the last five years.

Selected industry ratios have remained relatively steady at the following levels for the last five years:

	2012-2016
Rate earned on total assets	19%
Rate earned on stockholders' equity	26%
Number of times interest charges are earned	3 .4
Ratio of liabilities to stockholders' equity	1 .4

Instructions

1. Prepare four line graphs with the ratio on the vertical axis and the years on the hori- zontal axis for the following four ratios (rounded to one decimal place):

a. Rate earned on total assets

b. Rate earned on stockholders' equity

c. Number of times interest charges are earned

d. Ratio of liabilities to stockholders' equity

Display both the company ratio and the industry benchmark on each graph. That is, each graph should have two lines.

Reference no: EM131123019

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