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) $2,142,000 Liabilities: Current liabilities $204,000 Note payable, 6%, due in 15 years 1,020,000 Total liabilities $1,224,000 Stockholders' equity: Preferred $2 stock, $100 par (no change during year) $1,836,000 Common stock, $10 par (no change during year) 1,836,000 Retained earnings: Balance, beginning of year $1,958,000 Net income 596,000 $2,554,000 Preferred dividends $36,720 Common dividends 69,280 106,000 Balance, end of year 2,448,000 Total stockholders' equity $6,120,000 Sales $19,884,450 Interest expense $61,200 Assuming that long-term investments totaled $3,672,000 throughout the year and that total assets were $6,977,000 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 %

Financial Accounting

15th Edition

ISBN:9781337272124

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter17: Financial Statement Analysis

Section: Chapter Questions

Problem 20E: Five measures of solvency or profitability The balance sheet for Garcon Inc. at the end of the...

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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)				$2,142,000
Liabilities:
	Current liabilities		$204,000
	Note payable, 6%, due in 15 years		1,020,000
	Total liabilities				$1,224,000
Stockholders' equity:
	Preferred $2 stock, $100 par (no change during year)				$1,836,000
	Common stock, $10 par (no change during year)				1,836,000
Retained earnings:
	Balance, beginning of year	$1,958,000
	Net income	596,000	$2,554,000
	Preferred dividends	$36,720
	Common dividends	69,280	106,000
	Balance, end of year				2,448,000
Total stockholders' equity				$6,120,000
Sales				$19,884,450
Interest expense				$61,200

Assuming that long-term investments totaled $3,672,000 throughout the year and that total assets were $6,977,000 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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