Question

1. Six Measures of The ability of a company to make its periodic interest payments and repay the face amount of debt at maturity.Solvency or The ability of a firm to generate earnings.Profitability

   The following data were taken from the financial statements of Gates Inc. for the current fiscal year.

   Property, plant, and equipment (net)						$818,400
   Liabilities:
   	Current liabilities			$137,000
   	Note payable, 6%, due in 15 years			682,000
   	Total liabilities					$819,000
   Stockholders' equity:
   	Preferred $2 stock, $100 par (no change during year)					$614,250
   	Common stock, $10 par (no change during year)					614,250
   Retained earnings:
   	Balance, beginning of year	$656,000
   	Net income	246,000		$902,000
   	Preferred dividends	$12,285
   	Common dividends	70,715		83,000
   	Balance, end of year					819,000
   Total stockholders' equity						$2,047,500
   Sales						$11,458,475
   Interest expense						$40,920

   Assuming that total assets were $2,723,000 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