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)						$895,700
Liabilities:
	Current liabilities			$139,000
	Note payable, 6%, due in 15 years			689,000
	Total liabilities					$828,000
Stockholders' equity:
	Preferred $2 stock, $100 par (no change during year)					$1,242,000
	Common stock, $10 par (no change during year)					1,242,000
Retained earnings:
	Balance, beginning of year	$1,324,000
	Net income	442,000		$1,766,000
	Preferred dividends	$24,840
	Common dividends	85,160		110,000
	Balance, end of year					1,656,000
Total stockholders' equity						$4,140,000
Sales						$30,517,200
Interest expense						$41,340

Assuming that total assets were $4,720,000 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

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