The following data were taken from the financial statements of Woodwork Enterprises Inc. for the current fiscal year. Assuming that there are no intangible assets. Property, plant, and equipment (net) $ 5,000,000 Liabilities: Current liabilities $ 400,000 Mortgage note payable, 5%, ten-year note issued two years ago 3,600,000 Total liabilities $4,000,000 Stockholders' equity: Preferred $1 stock, $10 par (no change during year) $1,000,000 Common stock, $5 par (no change during year) 2,000,000 Retained earnings: Balance, beginning of year $8,000,000 Net income 500,000 $8,500,000 Preferred dividends $ 100,000 Common dividends 100,000 (200,000) Balance, end of year 8,300,000 Total stockholders' equity $11,300,000 Sales $ 6,250,000 Interest expense $ 180,000 Beginning-of-the-year amounts: Property, plant, and equipment (net) $ 4,500,000 Total assets 12,200,000 Retained earnings 8,000,000 Determine the following: (a) debt ratio, (b) ratio of fixed assets to long-term liabilities, (c) ratio of liabilities to stockholders’ equity, (d) asset turnover, (e) return on total assets, (f) return on stockholders’ equity, and (g) return on common stockholders' equity. Round to two decimal places. a. Debt ratio fill in the blank 1 % b. Ratio of fixed assets to long-term liabilities fill in the blank 2 c. Ratio of liabilities to stockholders’ equity fill in the blank 3 d. Asset turnover fill in the blank 4 e. Return on total assets fill in the blank 5 % f. Return on stockholders’ equity fill in the blank 6 % g. Return on common stockholders’ equity fill in the blank 7 %

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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(Answer to G)

The following data were taken from the financial statements of Woodwork Enterprises Inc. for the current fiscal year. Assuming that there are no intangible assets.

Property, plant, and equipment (net)				$ 5,000,000
Liabilities:
	Current liabilities		$ 400,000
	Mortgage note payable, 5%, ten-year note issued two years ago		3,600,000
	Total liabilities				$4,000,000
Stockholders' equity:
	Preferred $1 stock, $10 par (no change during year)				$1,000,000
	Common stock, $5 par (no change during year)				2,000,000
Retained earnings:
	Balance, beginning of year	$8,000,000
	Net income	500,000	$8,500,000
	Preferred dividends	$ 100,000
	Common dividends	100,000	(200,000)
	Balance, end of year				8,300,000
Total stockholders' equity				$11,300,000
Sales				$ 6,250,000
Interest expense				$ 180,000
Beginning-of-the-year amounts:
	Property, plant, and equipment (net)				$ 4,500,000
	Total assets				12,200,000
	Retained earnings				8,000,000

Determine the following: (a) debt ratio, (b) ratio of fixed assets to long-term liabilities, (c) ratio of liabilities to stockholders’ equity, (d) asset turnover, (e) return on total assets, (f) return on stockholders’ equity, and (g) return on common stockholders' equity. Round to two decimal places.

a.	Debt ratio	fill in the blank 1 %
b.	Ratio of fixed assets to long-term liabilities	fill in the blank 2
c.	Ratio of liabilities to stockholders’ equity	fill in the blank 3
d.	Asset turnover	fill in the blank 4
e.	Return on total assets	fill in the blank 5 %
f.	Return on stockholders’ equity	fill in the blank 6 %
g.	Return on common stockholders’ equity	fill in the blank 7 %

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