Answered: Property, plant, and equipment (net) $…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter16: Financial Statement Analysis

Section: Chapter Questions

Problem 23E

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Question

Six measures of solvency or profitability
The following data were taken from the financial .statements of Gates Inc. for the current fiscal year

Assuming that long-term investments totaled $3,000,000 throughout the year and that total assets were $7,000,000 at the beginning of the current fiscal year, determine the following: (A) ratio of fixed assets to long-term liabilities, (B) ratio of liabilities to stockholders' equity, (C) asset turnover, (D) return on total assets, (E) return on stockholders" equity, and (F) return on common stockholders' equity. (Round ratios and percentages to one decimal place as appropriate.)

Property, plant, and equipment (net)
$ 3,200,000
Liabilities:
Current liabilities.....
$1,000,000
Note payable, 6%, due in 15 years
Total liabilities ...
Stockholders' equity:
Preferred $10 stock, $100 par (no change during year)...
2,000,000
$ 3,000,000
$ 1,000,000
Common stock, $10 par (no change during year)
2,000,000
Retained earnings:
Balance, beginning of year....
Net income.....
$1,570,000
930,000 $2,500,000
$ 100,000
Preferred dividends .
Common dividends
400,000
500,000
Balance, end of year..
2,000,000
$ 5000,000
$18,900,000
$ 120,000
Total stockholders'equity .
Sales ....
Interest expense

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