Reference no: EM132379007
Question: 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) $3,200,000
Liabilities:
Current liabilities $1,000,000
Note payable, 6%, due in 15 years 2,000,000
Total liabilities $3,000,000
Stockholders' equity:
Preferred $10 stock, $100 par (no change during year) $1,000,000
Common stock, $10 par (no change during year) 2,000,000
Retained earnings:
Balance, beginning of year $1,570,000
Net income 930,000 $2,500,000
Preferred dividends $100,000
Common dividends 400,000 500,000
Balance, end of year 2,000,000
Total stockholders' equity $5,000,000
Sales $18,900,000
Interest expense $120,000
Assuming that long-term investments totaled $3,000,000 throughout the year and that total assets were $7,000,000 at the beginning of the current fiscal year, determine the following. 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%