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) $982,500 Liabilities: Current liabilities $131,000 Note payable, 6%, due in 15 years 655,000 Total liabilities $786,000 Stockholders' equity: Preferred $2 stock, $100 par (no change during year) $471,600 Common stock, $10 par (no change during year) 471,600 Retained earnings: Balance, beginning of year $504,000 Net income 254,000 $758,000 Preferred dividends $9,432 Common dividends 119,768 129,200 Balance, end of year 628,800 Total stockholders' equity $1,572,000 Sales $11,035,200 Interest expense $39,300 Assuming that total assets were $2,240,000 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 fill in the blank 6%

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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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)				$982,500
Liabilities:
	Current liabilities		$131,000
	Note payable, 6%, due in 15 years		655,000
	Total liabilities				$786,000
Stockholders' equity:
	Preferred $2 stock, $100 par (no change during year)				$471,600
	Common stock, $10 par (no change during year)				471,600
Retained earnings:
	Balance, beginning of year	$504,000
	Net income	254,000	$758,000
	Preferred dividends	$9,432
	Common dividends	119,768	129,200
	Balance, end of year				628,800
Total stockholders' equity				$1,572,000
Sales				$11,035,200
Interest expense				$39,300

Assuming that total assets were $2,240,000 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	fill in the blank 6%

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