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)						$1,495,500
Liabilities:
	Current liabilities			$200,000
	Note payable, 6%, due in 15 years			997,000
	Total liabilities					$1,197,000
Stockholders' equity:
	Preferred $2 stock, $100 par (no change during year)					$718,200
	Common stock, $10 par (no change during year)					718,200
Retained earnings:
	Balance, beginning of year	$766,000
	Net income	322,000		$1,088,000
	Preferred dividends	$14,364
	Common dividends	116,036		130,400
	Balance, end of year					957,600
Total stockholders' equity						$2,394,000
Sales						$17,855,100
Interest expense						$59,820

Assuming that total assets were $3,411,000 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