The following data were taken from the financial statements of Gates Inc. for the current fiscal year.Property, plant, and equipment (net) $3,200,000Liabilities: Current liabilities $1,000,000 Note payable, 6%, due in 15 years 2,000,000 Total liabilities $3,000,000Stockholders’ equity: Preferred $10 stock, $100 par (no change during year) $1,000,000 Common stock, $10 par (no change during year) 2,000,000Retained earnings: Balance, beginning of year$1,570,000 Net income930,000 Preferred dividends(100,000) Common dividends(400,000) Balance, end of year 2,000,000Total stockholders’ equity $5,000,000Sales $18,900,000Interest expense $120,000Assuming that long-term investments totaled $3,000,000 throughout the year and that total assets were $7,000,000 at the beginning of the current fiscal year, determine the following. Round to one decimal place.a. Ratio of fixed assets to long-term liabilitiesfill in the blank 1b. Ratio of liabilities to stockholders' equityfill in the blank 2c. Asset turnoverfill in the blank 3d. Return on total assetsfill in the blank 4 %e. Return on stockholders’ equityfill in the blank 5 %f. Return on common stockholders’ equityfill in the blank 6 %

Calculation of different ratios are shown hereunder : Total Assets at the beginning of the current…

Answered: determine the following. Round to one…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter16: Financial Statement Analysis

Section: Chapter Questions

Problem 13E: Ratio of liabilities to stockholders equity and times interest earned The following data were taken...

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The following data were taken from the financial statements of Gates Inc. for the current fiscal year.

Property, plant, and equipment (net)				$3,200,000
Liabilities:
	Current liabilities		$1,000,000
	Note payable, 6%, due in 15 years		2,000,000
	Total liabilities				$3,000,000
Stockholders’ equity:
	Preferred $10 stock, $100 par (no change during year)				$1,000,000
	Common stock, $10 par (no change during year)				2,000,000
Retained earnings:
	Balance, beginning of year	$1,570,000
	Net income	930,000
	Preferred dividends	(100,000)
	Common dividends	(400,000)
	Balance, end of year				2,000,000
Total stockholders’ equity				$5,000,000
Sales				$18,900,000
Interest expense				$120,000

Assuming that long-term investments totaled $3,000,000 throughout the year and that total assets were $7,000,000 at the beginning of the current fiscal year, determine the following. Round 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 %

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