Seven metrics
The following data were taken from the financial statements ofWoodwork Enterprises Inc. for the current fiscal year. Assumingthat there are no intangible assets.
| Property, plant, and equipment (net) | | | | | $ 5,000,000 |
| Liabilities: | | | | | |
| Current liabilities | | | $ 400,000 | | |
| Mortgage note payable, 5%, ten-year note issued two yearsago | | | 3,600,000 | | |
| Total liabilities | | | | | $4,000,000 |
| Stockholders' equity: | | | | | |
| Preferred $1 stock, $10 par (no change during year) | | | | | $1,000,000 |
| Common stock, $5 par (no change during year) | | | | | 2,000,000 |
| Retained earnings: | | | | | |
| Balance, beginning of year | $8,000,000 | | | | |
| Net income | 500,000 | | $8,500,000 | | |
| Preferred dividends | $ 100,000 | | | | |
| Common dividends | 100,000 | | (200,000) | | |
| Balance, end of year | | | | | 8,300,000 |
| Total stockholders' equity | | | | | $11,300,000 |
| Sales | | | | | $ 6,250,000 |
| Interest expense | | | | | $ 180,000 |
| Beginning-of-the-year amounts: | | | | | |
| Property, plant, and equipment (net) | | | | | $ 4,500,000 |
| Total assets | | | | | 12,200,000 |
| Retained earnings | | | | | 8,000,000 |
Determine the following: (a) debt ratio, (b) A leverage ratiothat measures the margin of safety of long-term creditors,calculated as the net fixed assets divided by the long-termliabilities.ratio of fixed assets to long-term liabilities, (c) Acomprehensive leverage ratio that measures the relationship of theclaims of creditors to stockholders' equity.ratio of liabilities tostockholders’ equity, (d) Ratio that measures how effectively acompany uses its assets, computed as net sales divided by averagetotal assets (excluding long-term investments).asset turnover, (e)A measure of the profitability of assets, without regard to theequity of creditors and stockholders in the assets.return on totalassets, (f) A measure of profitability computed by dividing netincome by average total stockholders' equity.return onstockholders’ equity, and (g) A measure of profitability computedby dividing net income less preferred dividends by average commonstockholders' equity.return on common stockholders' equity. Roundto two decimal places.
| a. | Debt ratio | % |
| b. | Ratio of fixed assets to long-term liabilities | |
| c. | Ratio of liabilities to stockholders’ equity | |
| d. | Asset turnover | |
| e. | Return on total assets | % |
| f. | Return on stockholders’ equity | % |
| g. | Return on common stockholders’ equity | % |
