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10. Six Measures of Solvency or Profitability The following data were taken from the financial statements of Gates...

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Accounting

10.

  1. Six Measures of Solvency or Profitability

    The following data were taken from the financial statements ofGates Inc. for the current fiscal year.

    Property, plant, and equipment (net)$2,127,400
    Liabilities:
    Current liabilities$194,000
    Note payable, 6%, due in 15 years967,000
    Total liabilities$1,161,000
    Stockholders' equity:
    Preferred $4 stock, $100 par (no change during year)$1,161,000
    Common stock, $10 par (no change during year)1,161,000
    Retained earnings:
    Balance, beginning of year$1,238,000
    Net income451,000$1,689,000
    Preferred dividends$46,440
    Common dividends94,560141,000
    Balance, end of year1,548,000
    Total stockholders' equity$3,870,000
    Sales$23,053,500
    Interest expense$58,020

    Assuming that total assets were $4,779,000 at the beginning ofthe current fiscal year, determine the following. When required,round to one decimal place.

    a. Ratio of fixed assets to long-termliabilities
    b. Ratio of liabilities to stockholders'equity
    c. Asset turnover
    d. Return on total assets%
    e. Return on stockholders’ equity%
    f. Return on common stockholders' equity%

Answer & Explanation Solved by verified expert
4.4 Ratings (962 Votes)
a Ratio of fixed assets to long term liabilties Fixed assets Long term liabilities 2127400 967000 22 b Ratio of liabilities to stockholders equity Liabilities Stockholders equity 1161000 3870000 03 c Ending total assets Ending total liabilities    See Answer
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