Jolie Foster Care Homes Inc. shows the following data:

Year	Net Income	Total assets	Stockholder’s Equity	Total debts
20X1	\(155,000	\)2,390,000	\(761,000	\)1,629,000
20X2	191,000	2,700,000	966,000	1,734,000
20X3	208,000	2,730,000	1,770,000	960,000
20X4	192,000	2,470,000	2,220,000	250,000

a. Compute the ratio of net income to total assets for each year and commenton the trend.

$\begin{array}{rcl}\mathrm{Net}\mathrm{income}\mathrm{to}\mathrm{total}\mathrm{asset}\mathrm{ratio}& =& \frac{\mathrm{Net}\mathrm{income}}{\mathrm{Total}\mathrm{assets}}\\ & =& \frac{\$155,000}{\$2,390,000}\\ & =& 6.49\%\end{array}$

The net income to total assets ratio of the company for the year ending 20X1 is 6.49%

$\begin{array}{rcl}\mathrm{Net}\mathrm{income}\mathrm{to}\mathrm{total}\mathrm{asset}\mathrm{ratio}& =& \frac{\mathrm{Net}\mathrm{income}}{\mathrm{Total}\mathrm{assets}}\\ & =& \frac{\$191,000}{\$2,700,000}\\ & =& 7.07\%\end{array}$

The net income to total assets ratio of the company for the year ending 20X2 is 7.07%

$\begin{array}{rcl}\mathrm{Net}\mathrm{income}\mathrm{to}\mathrm{total}\mathrm{asset}\mathrm{ratio}& =& \frac{\mathrm{Net}\mathrm{income}}{\mathrm{Total}\mathrm{assets}}\\ & =& \frac{\$192,000}{\$2,730,000}\\ & =& 7.62\%\end{array}$

The net income to total assets ratio of the company for the year ending 20X3 is 7.62%.

$\begin{array}{rcl}\mathrm{Net}\mathrm{income}\mathrm{to}\mathrm{total}\mathrm{asset}\mathrm{ratio}& =& \frac{\mathrm{Net}\mathrm{income}}{\mathrm{Total}\mathrm{assets}}\\ & =& \frac{\$192,000}{\$2,470,000}\\ & =& 7.77\%\end{array}$

The net income to total assets ratio of the company for the year ending 20X4 is 7.77%. In addition, there is an upward movement in return on assets over the four-year period.