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)						$1,687,400
Liabilities:
	Current liabilities			$154,000
	Note payable, 6%, due in 15 years			767,000
	Total liabilities					$921,000
Stockholders' equity:
	Preferred $4 stock, $100 par (no change during year)					$690,750
	Common stock, $10 par (no change during year)					690,750
Retained earnings:
	Balance, beginning of year	$736,000
	Net income	251,000		$987,000
	Preferred dividends	$27,630
	Common dividends	38,370		66,000
	Balance, end of year					921,000
Total stockholders' equity						$2,302,500
Sales						$14,142,375
Interest expense						$46,020

Assuming that total assets were $3,062,000 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