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) $1,162,000 Liabilities: Current liabilities $166,000 Note payable, 6%, due in 15 years 830,000 Total liabilities $996,000 Stockholders' equity: Preferred $4 stock, $100 par (no change during year) $747,000 Common stock, $10 par (no change during year) 747,000 Retained earnings: Balance, beginning of year $796,000 Net income 291,000 $1,087,000 Preferred dividends $29,880 Common dividends 61,120 91,000 Balance, end of year 996,000 Total stockholders' equity $2,490,000 Sales $21,073,800 Interest expense $49,800 Assuming that total assets were $3,312,000 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)				$1,162,000
Liabilities:
	Current liabilities		$166,000
	Note payable, 6%, due in 15 years		830,000
	Total liabilities				$996,000
Stockholders' equity:
	Preferred $4 stock, $100 par (no change during year)				$747,000
	Common stock, $10 par (no change during year)				747,000
Retained earnings:
	Balance, beginning of year	$796,000
	Net income	291,000	$1,087,000
	Preferred dividends	$29,880
	Common dividends	61,120	91,000
	Balance, end of year				996,000
Total stockholders' equity				$2,490,000
Sales				$21,073,800
Interest expense				$49,800

Assuming that total assets were $3,312,000 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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