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)						$1,596,600
Liabilities:
	Current liabilities			$178,000
	Note payable, 6%, due in 15 years			887,000
	Total liabilities					$1,065,000
Stockholders' equity:
	Preferred $2 stock, $100 par (no change during year)					$1,065,000
	Common stock, $10 par (no change during year)					1,065,000
Retained earnings:
	Balance, beginning of year	$1,136,000
	Net income	396,000		$1,532,000
	Preferred dividends	$21,300
	Common dividends	90,700		112,000
	Balance, end of year					1,420,000
Total stockholders' equity						$3,550,000
Sales						$10,080,900
Interest expense						$53,220

Assuming that long-term investments totaled $2,308,000 throughout the year and that total assets were $4,384,000 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