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)						$966,400
Liabilities:
	Current liabilities			$122,000
	Note payable, 6%, due in 15 years			604,000
	Total liabilities					$726,000
Stockholders' equity:
	Preferred $4 stock, $100 par (no change during year)					$1,089,000
	Common stock, $10 par (no change during year)					1,089,000
Retained earnings:
	Balance, beginning of year	$1,162,000
	Net income	418,000		$1,580,000
	Preferred dividends	$43,560
	Common dividends	84,440		128,000
	Balance, end of year					1,452,000
Total stockholders' equity						$3,630,000
Sales						$24,207,900
Interest expense						$36,240

Assuming that total assets were $4,138,000 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