Six Measures of Solvency or ProfitabilityThe following data were taken from the financial statements of Gates Inc. for the current fiscal year.Property, plant, and equipment (net) $869,400Liabilities: Current liabilities $123,000 Note payable, 6%, due in 15 years 621,000 Total liabilities $744,000Stockholders' equity: Preferred $2 stock, $100 par (no change during year) $744,000 Common stock, $10 par (no change during year) 744,000Retained earnings: Balance, beginning of year$794,000 Net income274,000 $1,068,000 Preferred dividends$14,880 Common dividends61,120 76,000 Balance, end of year 992,000Total stockholders' equity $2,480,000Sales $19,804,050Interest expense $37,260Assuming that total assets were $3,063,000 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 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%

Accounting ratio compares the two lines items of the financial statements of the company, named as…

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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 Gates Inc. for the current fiscal year.

Property, plant, and equipment (net)				$869,400
Liabilities:
	Current liabilities		$123,000
	Note payable, 6%, due in 15 years		621,000
	Total liabilities				$744,000
Stockholders' equity:
	Preferred $2 stock, $100 par (no change during year)				$744,000
	Common stock, $10 par (no change during year)				744,000
Retained earnings:
	Balance, beginning of year	$794,000
	Net income	274,000	$1,068,000
	Preferred dividends	$14,880
	Common dividends	61,120	76,000
	Balance, end of year				992,000
Total stockholders' equity				$2,480,000
Sales				$19,804,050
Interest expense				$37,260

Assuming that total assets were $3,063,000 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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