Six Measures of Solvency or Profitability The following data were taken from the financial statements of Loveseth Inc. for the current fiscal year. Property, plant, and equipment (net) $1,529,500 Liabilities: Current liabilities $161,000 Note payable, 6%, due in 15 years 805,000 Total liabilities $966,000 Stockholders' equity: Preferred $4 stock, $100 par (no change during year) $1,449,000 Common stock, $10 par (no change during year) 1,449,000 Retained earnings: Balance, beginning of year $1,546,000 Net income 479,000 $2,025,000 Preferred dividends $57,960 Common dividends 35,040 93,000 Balance, end of year 1,932,000 Total stockholders' equity $4,830,000 Sales $25,429,500 Interest expense $48,300 Assuming that total assets were $5,506,000 at the beginning of the current fiscal year, determine the following: When required, 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

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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Question

Six Measures of Solvency or Profitability

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

Property, plant, and equipment (net)				$1,529,500
Liabilities:
	Current liabilities		$161,000
	Note payable, 6%, due in 15 years		805,000
	Total liabilities				$966,000
Stockholders' equity:
	Preferred $4 stock, $100 par (no change during year)				$1,449,000
	Common stock, $10 par (no change during year)				1,449,000
Retained earnings:
	Balance, beginning of year	$1,546,000
	Net income	479,000	$2,025,000
	Preferred dividends	$57,960
	Common dividends	35,040	93,000
	Balance, end of year				1,932,000
Total stockholders' equity				$4,830,000
Sales				$25,429,500
Interest expense				$48,300

Assuming that total assets were $5,506,000 at the beginning of the current fiscal year, determine the following: When required, 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