a. Ratio of fixed assets to long-term liabilities 1.9 b. Ratio of liabilities to stockholders' equity 0.7 C. Asset turnover 2.8 V d. Return on total assets 14.5 X % e. Return on stockholders' equity % f. Return on common stockholders' equity 53 X %
a. Ratio of fixed assets to long-term liabilities 1.9 b. Ratio of liabilities to stockholders' equity 0.7 C. Asset turnover 2.8 V d. Return on total assets 14.5 X % e. Return on stockholders' equity % f. Return on common stockholders' equity 53 X %
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Six Measures of Solvency or Profitability
The following data were taken from the financial statements of Loveseth Inc. for the current fiscal year.
$3,040,000
Property, plant, and equipment (net)
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 answ
a. Ratio of fixed assets to long-term liabilities
1.9
b. Ratio of liabilities to stockholders' equity
0.7
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Transcribed Image Text:* CengageNOwv2 | Online teach x
M HBO Max
G Grammarly
keAssignment/takeAssignmentMain.do?invoker3&takeAssignmentSessionLocator=&inprogress3false
O eBook
Six Measures of Solvency or Profitability
The following data were taken from the financial statements of Loveseth Inc. for the current fiscal year.
$3,040,000
Property, plant, and equipment (net)
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 answ
a. Ratio of fixed assets to long-term liabilities
1.9
b. Ratio of liabilities to stockholders' equity
0.7
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Common stock, $10 par (no change during year)
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,
Total stockholders' equity
$4,
Sales
$17,5
Interest expense
Assuming that total assets were $6,000,000 at the beginning of the current fiscal year, determine t
a. Ratio of fixed assets to long-term liabilities
1.9
b. Ratio of liabilities to stockholders' equity
0.7
C. Asset turnover
2.8
d. Return on total assets
14.5
X %
e. Return on stockholders' equity
f. Return on common stockholders' equity
53
X %
Feedback
T Check My Work
a. Divide property, plant, and equipment (net) by long-term liabilities.
b. Divide total liabilities by total stockholders'equity.
c. Divide sales by average total assets. Average total assets = (Beainnina total assets + Endin
Check My Work](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F58e131fb-63a4-4bb1-abed-22a17d9fc415%2Fb33541de-a1d5-452f-a715-d3bbae082142%2Fvo0epd_processed.jpeg&w=3840&q=75)
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keAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSessionLocator=&inprogress=
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Common stock, $10 par (no change during year)
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,
Total stockholders' equity
$4,
Sales
$17,5
Interest expense
Assuming that total assets were $6,000,000 at the beginning of the current fiscal year, determine t
a. Ratio of fixed assets to long-term liabilities
1.9
b. Ratio of liabilities to stockholders' equity
0.7
C. Asset turnover
2.8
d. Return on total assets
14.5
X %
e. Return on stockholders' equity
f. Return on common stockholders' equity
53
X %
Feedback
T Check My Work
a. Divide property, plant, and equipment (net) by long-term liabilities.
b. Divide total liabilities by total stockholders'equity.
c. Divide sales by average total assets. Average total assets = (Beainnina total assets + Endin
Check My Work
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