Six Measures of Solvency or Profitability The following data were taken from the financial statements of Loveseth Inc. for the current fiscal year. Property, plant, and equipment (net) $3,040,000 Liabilities: Current liabilities $1,200,000 Note payable, 6%, due in 15 years 1,600,000 Total liabilities $2,800,000 Stockholders’ equity: Preferred $10 stock, $100 par (no change during year) $800,000 Common stock, $10 par (no change during year) 1,600,000 Retained earnings: Balance, beginning of year $1,072,000 Net income 928,000 $2,000,000 Preferred dividends $80,000 Common dividends 320,000 400,000 Balance, end of year 1,600,000 Total stockholders’ equity $4,000,000 Sales $17,920,000 Interest expense $96,000 Assuming that total assets were $6,000,000 at the beginning of the current fiscal year, determine the following: Round your answers to one decimal place. a. Ratio of fixed assets to long-term liabilities fill in the blank 1 b. Ratio of liabilities to stockholders' equity fill in the blank 2 c. Asset turnover fill in the blank 3 d. Return on total assets fill in the blank 4% e. Return on stockholders’ equity fill in the blank 5% f. Return on common stockholders’ equity fill in the blank 6%
Six Measures of Solvency or Profitability The following data were taken from the financial statements of Loveseth Inc. for the current fiscal year. Property, plant, and equipment (net) $3,040,000 Liabilities: Current liabilities $1,200,000 Note payable, 6%, due in 15 years 1,600,000 Total liabilities $2,800,000 Stockholders’ equity: Preferred $10 stock, $100 par (no change during year) $800,000 Common stock, $10 par (no change during year) 1,600,000 Retained earnings: Balance, beginning of year $1,072,000 Net income 928,000 $2,000,000 Preferred dividends $80,000 Common dividends 320,000 400,000 Balance, end of year 1,600,000 Total stockholders’ equity $4,000,000 Sales $17,920,000 Interest expense $96,000 Assuming that total assets were $6,000,000 at the beginning of the current fiscal year, determine the following: Round your answers to one decimal place. a. Ratio of fixed assets to long-term liabilities fill in the blank 1 b. Ratio of liabilities to stockholders' equity fill in the blank 2 c. Asset turnover fill in the blank 3 d. Return on total assets fill in the blank 4% e. Return on stockholders’ equity fill in the blank 5% f. Return on common stockholders’ equity fill in the blank 6%
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...
Related questions
Question
Six Measures of Solvency or Profitability
The following data were taken from the financial statements of Loveseth Inc. for the current fiscal year.
Property, plant, and equipment (net) | $3,040,000 | |||||
Liabilities: | ||||||
Current liabilities | $1,200,000 | |||||
Note payable, 6%, due in 15 years | 1,600,000 | |||||
Total liabilities | $2,800,000 | |||||
Stockholders’ equity: | ||||||
$800,000 | ||||||
Common stock, $10 par (no change during year) | 1,600,000 | |||||
Balance, beginning of year | $1,072,000 | |||||
Net income | 928,000 | $2,000,000 | ||||
Preferred dividends | $80,000 | |||||
Common dividends | 320,000 | 400,000 | ||||
Balance, end of year | 1,600,000 | |||||
Total stockholders’ equity | $4,000,000 | |||||
Sales | $17,920,000 | |||||
Interest expense | $96,000 |
Assuming that total assets were $6,000,000 at the beginning of the current fiscal year, determine the following: Round your answers to one decimal place.
a. Ratio of fixed assets to long-term liabilities | fill in the blank 1 |
b. Ratio of liabilities to |
fill in the blank 2 |
c. Asset turnover | fill in the blank 3 |
d. Return on total assets | fill in the blank 4% |
e. Return on stockholders’ equity | fill in the blank 5% |
f. Return on common stockholders’ equity | fill in the blank 6% |
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Step 1 Introduction
VIEWStep 2 a) Computation of Fixed assets to long term liabilities ratio
VIEWStep 3 b) Computation of Liabilities to Stockholder equity ratio
VIEWStep 4 c) Computation of Assets turnover ratio
VIEWStep 5 d) Computation of Return on total assets
VIEWStep 6 e) Computation of Return on shareholder equity
VIEWStep 7 f) Computation of Return on Common stockholder equity
VIEWTrending now
This is a popular solution!
Step by step
Solved in 7 steps
Follow-up Questions
Read through expert solutions to related follow-up questions below.
Follow-up Question
how did you find the average common
Solution
by Bartleby Expert
Follow-up Question
Where did you get the 6 million in assets turnover problem?
Solution
by Bartleby Expert
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Financial Accounting
Accounting
ISBN:
9781337272124
Author:
Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:
Cengage Learning
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Financial Accounting
Accounting
ISBN:
9781337272124
Author:
Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:
Cengage Learning
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
Financial Accounting: The Impact on Decision Make…
Accounting
ISBN:
9781305654174
Author:
Gary A. Porter, Curtis L. Norton
Publisher:
Cengage Learning