Six Measures of Solvency or Profitability The following data were taken from the financial statements of Gates Inc. for the current fiscal year. Property, plant, and equipment (net) $998,400 Liabilities: Current liabilities $126,000 Note payable, 6%, due in 15 years 624,000 Total liabilities $750,000 Stockholders' equity: Preferred $4 stock, $100 par (no change during year) $1,125,000 Common stock, $10 par (no change during year) 1,125,000 Retained earnings: Balance, beginning of year $1,200,000 Net income 484,000 $1,684,000 Preferred dividends $45,000 Common dividends 139,000 184,000 Balance, end of year 1,500,000 Total stockholders' equity $3,750,000 Sales $21,498,750 Interest expense $37,440 Assuming that total assets were $4,275,000 at the beginning of the current fiscal year, determine the following. When required, round to one decimal place. 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 % f. Return on common stockholders' equity %

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 52E: Juroe Company provided the following income statement for last year: Juroes balance sheet as of...

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Six Measures of Solvency or Profitability

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

Property, plant, and equipment (net)				$998,400
Liabilities:
	Current liabilities		$126,000
	Note payable, 6%, due in 15 years		624,000
	Total liabilities				$750,000
Stockholders' equity:
	Preferred $4 stock, $100 par (no change during year)				$1,125,000
	Common stock, $10 par (no change during year)				1,125,000
Retained earnings:
	Balance, beginning of year	$1,200,000
	Net income	484,000	$1,684,000
	Preferred dividends	$45,000
	Common dividends	139,000	184,000
	Balance, end of year				1,500,000
Total stockholders' equity				$3,750,000
Sales				$21,498,750
Interest expense				$37,440

Assuming that total assets were $4,275,000 at the beginning of the current fiscal year, determine the following. When required, round to one decimal place.

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	%
f. Return on common stockholders' equity	%

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