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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) $1,725,000 Liabilities: Current liabilities $150,000 Note payable, 6%, due in 15 years 750,000 Total liabilities $900.000

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) $1,725,000 Liabilities: Current liabilities $150,000 Note payable, 6%, due in 15 years 750,000 Total liabilities $900.000

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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### Six Measures of Solvency or Profitability The following data were extracted from the financial statements of Gates Inc. for the current fiscal year. #### Property, Plant, and Equipment (Net): - **$1,725,000** #### Liabilities: - **Current Liabilities**: $150,000 - **Note Payable**: 6% due in 15 years: $750,000 - **Total Liabilities**: $900,000 #### Stockholders' Equity: - **Preferred $4 Stock, $100 Par**: $540,000 (No change during year) - **Common Stock, $10 Par**: $540,000 (No change during year) #### Retained Earnings: - **Balance, Beginning of Year**: $576,000 - **Net Income**: $219,000 - Total: $795,000 - **Less: Preferred Dividends**: $21,600 - **Common Dividends**: $53,400 - Total: $75,000 - **Balance, End of Year**: $720,000 #### Total Stockholders' Equity: - **$1,800,000** #### Sales: - **$11,846,250** This data provides a comprehensive view of Gates Inc.'s financial position, showcasing assets, liabilities, stockholders' equity, retained earnings, and sales for strategic analysis.
Transcribed Image Text:### Six Measures of Solvency or Profitability The following data were extracted from the financial statements of Gates Inc. for the current fiscal year. #### Property, Plant, and Equipment (Net): - **$1,725,000** #### Liabilities: - **Current Liabilities**: $150,000 - **Note Payable**: 6% due in 15 years: $750,000 - **Total Liabilities**: $900,000 #### Stockholders' Equity: - **Preferred $4 Stock, $100 Par**: $540,000 (No change during year) - **Common Stock, $10 Par**: $540,000 (No change during year) #### Retained Earnings: - **Balance, Beginning of Year**: $576,000 - **Net Income**: $219,000 - Total: $795,000 - **Less: Preferred Dividends**: $21,600 - **Common Dividends**: $53,400 - Total: $75,000 - **Balance, End of Year**: $720,000 #### Total Stockholders' Equity: - **$1,800,000** #### Sales: - **$11,846,250** This data provides a comprehensive view of Gates Inc.'s financial position, showcasing assets, liabilities, stockholders' equity, retained earnings, and sales for strategic analysis.
### Financial Information and Ratios #### Retained Earnings: - **Balance, beginning of year**: $576,000 - **Net Income**: - Current: $219,000 - Projected/Other: $795,000 - **Preferred Dividends**: $21,600 - **Common Dividends**: - Current: $53,400 - Projected/Other: $75,000 #### Balance: - **End of Year Balance**: $720,000 #### Total Stockholders' Equity: - **Amount**: $1,800,000 #### Sales: - **Total Sales**: $11,846,250 #### Interest Expense: - **Amount**: $45,000 #### Financial Ratios (Assuming total assets were $2,565,000 at the beginning of the current fiscal year): - **a. Ratio of fixed assets to long-term liabilities**: 2.3 - **b. Ratio of liabilities to stockholders' equity**: 0.5 - **c. Asset Turnover**: (To be calculated and inserted) - **d. Return on Total Assets (%)**: (To be calculated and inserted) - **e. Return on Stockholders' Equity (%)**: (To be calculated and inserted) - **f. Return on Common Stockholders' Equity (%)**: (To be calculated and inserted) ### Instructions Each ratio provides insight into different aspects of a company’s financial health and performance. Understanding and calculating these ratios will enable businesses to make informed decisions and assess their financial strategies effectively.
Transcribed Image Text:### Financial Information and Ratios #### Retained Earnings: - **Balance, beginning of year**: $576,000 - **Net Income**: - Current: $219,000 - Projected/Other: $795,000 - **Preferred Dividends**: $21,600 - **Common Dividends**: - Current: $53,400 - Projected/Other: $75,000 #### Balance: - **End of Year Balance**: $720,000 #### Total Stockholders' Equity: - **Amount**: $1,800,000 #### Sales: - **Total Sales**: $11,846,250 #### Interest Expense: - **Amount**: $45,000 #### Financial Ratios (Assuming total assets were $2,565,000 at the beginning of the current fiscal year): - **a. Ratio of fixed assets to long-term liabilities**: 2.3 - **b. Ratio of liabilities to stockholders' equity**: 0.5 - **c. Asset Turnover**: (To be calculated and inserted) - **d. Return on Total Assets (%)**: (To be calculated and inserted) - **e. Return on Stockholders' Equity (%)**: (To be calculated and inserted) - **f. Return on Common Stockholders' Equity (%)**: (To be calculated and inserted) ### Instructions Each ratio provides insight into different aspects of a company’s financial health and performance. Understanding and calculating these ratios will enable businesses to make informed decisions and assess their financial strategies effectively.
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