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)						$1,285,700
Liabilities:
	Current liabilities			$199,000
	Note payable, 6%, due in 15 years			989,000
	Total liabilities					$1,188,000
Stockholders' equity:
	Preferred $2 stock, $100 par (no change during year)					$1,782,000
	Common stock, $10 par (no change during year)					1,782,000
Retained earnings:
	Balance, beginning of year	$1,900,000
	Net income	623,000		$2,523,000
	Preferred dividends	$35,640
	Common dividends	111,360		147,000
	Balance, end of year					2,376,000
Total stockholders' equity						$5,940,000
Sales						$19,300,200
Interest expense						$59,340

Assuming that long-term investments totaled $3,564,000 throughout the year and that total assets were $6,772,000 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