Hey, I'm having problems trying to find the solution for e and f. can you guys help! 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) $3,200,000 Liabilities: Current liabilities $1,000,000 Mortgage note payable, 6%, issued 2005, due 2021 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 $2,500,000 Preferred dividends $100,000 Common dividends 400,000 500,000 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 asset was $7,000,000 at the beginning of the current fiscal year, determine the following. Round to one decimal place. e. Rate earned on stockholders' equity % f. Rate earned on common stockholders' equity

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter3: Evaluation Of Financial Performance

Section: Chapter Questions

Problem 19P

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Hey, I'm having problems trying to find the solution for e and f. can you guys help!

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)				$3,200,000
Liabilities:
	Current liabilities		$1,000,000
	Mortgage note payable, 6%, issued 2005, due 2021		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	$2,500,000
	Preferred dividends	$100,000
	Common dividends	400,000	500,000
	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 asset was $7,000,000 at the beginning of the current fiscal year, determine the following. Round to one decimal place.

e. Rate earned on stockholders' equity	%
f. Rate earned on common stockholders' equity

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