10.
Six Measures of Solvency or Profitability
The following data were taken from the financial statements of
Gates...
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Accounting
10.
Six Measures of Solvency or Profitability
The following data were taken from the financial statements ofGates Inc. for the current fiscal year.
Property, plant, and equipment (net)
$2,127,400
Liabilities:
Current liabilities
$194,000
Note payable, 6%, due in 15 years
967,000
Total liabilities
$1,161,000
Stockholders' equity:
Preferred $4 stock, $100 par (no change during year)
$1,161,000
Common stock, $10 par (no change during year)
1,161,000
Retained earnings:
Balance, beginning of year
$1,238,000
Net income
451,000
$1,689,000
Preferred dividends
$46,440
Common dividends
94,560
141,000
Balance, end of year
1,548,000
Total stockholders' equity
$3,870,000
Sales
$23,053,500
Interest expense
$58,020
Assuming that total assets were $4,779,000 at the beginning ofthe current fiscal year, determine the following. When required,round to one decimal place.
a. Ratio of fixed assets to long-termliabilities
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 & Explanation
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4.4 Ratings (962 Votes)
a Ratio of fixed assets to long term liabilties Fixed assets Long term liabilities 2127400 967000 22 b Ratio of liabilities to stockholders equity Liabilities Stockholders equity 1161000 3870000 03 c Ending total assets Ending total liabilities
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