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) $1,162,000 Liabilities: Current liabilities $166,000 Note payable, 6%, due in 15 years 830,000 Total liabilities $996,000 Stockholders' equity: Preferred $4 stock, $100 par (no change during year) $747,000 Common stock, $10 par (no change during year) 747,000 Retained earnings: Balance, beginning of year $796,000 Net income 291,000 $1,087,000 Preferred dividends $29,880 Common dividends 61,120 91,000 Balance, end of year 996,000 Total stockholders' equity $2,490,000 Sales $21,073,800 Interest expense $49,800 Assuming that total assets were $3,312,000 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 b. Ratio of liabilities to stockholders' equity c. Asset turnover d. Return on total assets % e. Return on stockholders’ equity % f. Return on common stockholders' equity %
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) $1,162,000 Liabilities: Current liabilities $166,000 Note payable, 6%, due in 15 years 830,000 Total liabilities $996,000 Stockholders' equity: Preferred $4 stock, $100 par (no change during year) $747,000 Common stock, $10 par (no change during year) 747,000 Retained earnings: Balance, beginning of year $796,000 Net income 291,000 $1,087,000 Preferred dividends $29,880 Common dividends 61,120 91,000 Balance, end of year 996,000 Total stockholders' equity $2,490,000 Sales $21,073,800 Interest expense $49,800 Assuming that total assets were $3,312,000 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 b. Ratio of liabilities to stockholders' equity c. Asset turnover d. Return on total assets % e. Return on stockholders’ equity % f. Return on common stockholders' equity %
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) | $1,162,000 | |||||
Liabilities: | ||||||
Current liabilities | $166,000 | |||||
Note payable, 6%, due in 15 years | 830,000 | |||||
Total liabilities | $996,000 | |||||
$747,000 | ||||||
Common stock, $10 par (no change during year) | 747,000 | |||||
Balance, beginning of year | $796,000 | |||||
Net income | 291,000 | $1,087,000 | ||||
Preferred dividends | $29,880 | |||||
Common dividends | 61,120 | 91,000 | ||||
Balance, end of year | 996,000 | |||||
Total stockholders' equity | $2,490,000 | |||||
Sales | $21,073,800 | |||||
Interest expense | $49,800 |
Assuming that total assets were $3,312,000 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 | |
b. Ratio of liabilities to stockholders' equity | |
c. Asset turnover | |
d. Return on total assets | % |
e. Return on stockholders’ equity | % |
f. Return on common stockholders' equity | % |
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