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)						$1,238,900
Liabilities:
	Current liabilities			$190,000
	Note payable, 6%, due in 15 years			953,000
	Total liabilities					$1,143,000
Stockholders' equity:
	Preferred $4 stock, $100 par (no change during year)					$1,143,000
	Common stock, $10 par (no change during year)					1,143,000
Retained earnings:
	Balance, beginning of year	$1,220,000
	Net income	479,000		$1,699,000
	Preferred dividends	$45,720
	Common dividends	129,280		175,000
	Balance, end of year					1,524,000
Total stockholders' equity						$3,810,000
Sales						$23,179,200
Interest expense						$57,180

Assuming that total assets were $4,705,000 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	%

Answer 1