Compute ratio of net income to total assets


Problem:

Jodie Foster Care Homes, Inc., shows the following:

Year    Net Income    Total Assets    Stockholder's Equity    Total Debt
2011    $118,000    $1,900,000    $700,000    $1,200,000
2012    131,000    1,950,000    950,000    1,000,000
2013    148,000    2,010,000    1,100,000    910,000
2014    175,700    2,050,000    1,420,000    630,000

Q1. Compute the ratio of net income to total assets for each year and comment on the trend.

Q2. Compute the ratio of net income to stockholder's equity and comment on the trend. Explain why there may be a difference in trends between parts 1 and 2.

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Finance Basics: Compute ratio of net income to total assets
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