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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.
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