Question

1. 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)						$1,353,300
   Liabilities:
   	Current liabilities			$207,000
   	Note payable, 6%, due in 15 years			1,041,000
   	Total liabilities					$1,248,000
   Stockholders' equity:
   	Preferred $2 stock, $100 par (no change during year)					$748,800
   	Common stock, $10 par (no change during year)					748,800
   Retained earnings:
   	Balance, beginning of year	$798,000
   	Net income	397,000		$1,195,000
   	Preferred dividends	$14,976
   	Common dividends	181,624		196,600
   	Balance, end of year					998,400
   Total stockholders' equity						$2,496,000
   Sales						$15,332,100
   Interest expense						$62,460

   Assuming that total assets were $3,557,000 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