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Property, plant, and equipment (net) $ 3,200,000 Liabilities: Current liabilities... Note payable, 6%, due in 15 years $1,000,000 2,000,000 Total liabilities ... Stockholders' equity: $ 3,000,000 $ 1,000,000 Preferred $10 stock, $100 par (no change during year)... Common stock, $10 par (no change during year) .... 2,000,000 Retained earnings: Balance, beginning of year..... $1,570,000 930,000 $2,500,000 $ 100,000 Net income... Preferred dividends Common dividends . Balance, end of year.. Total stockholders' equity . 400,000 500,000 2,000,000 $ 5,000,000 $18,900,000 $ 120,000 ........ Sales ... ...... Interest expense ...

Property, plant, and equipment (net) $ 3,200,000 Liabilities: Current liabilities... Note payable, 6%, due in 15 years $1,000,000 2,000,000 Total liabilities ... Stockholders' equity: $ 3,000,000 $ 1,000,000 Preferred $10 stock, $100 par (no change during year)... Common stock, $10 par (no change during year) .... 2,000,000 Retained earnings: Balance, beginning of year..... $1,570,000 930,000 $2,500,000 $ 100,000 Net income... Preferred dividends Common dividends . Balance, end of year.. Total stockholders' equity . 400,000 500,000 2,000,000 $ 5,000,000 $18,900,000 $ 120,000 ........ Sales ... ...... Interest expense ...

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question

Six measures of solvency or profitability
The following data were taken from the financial statements of Gates
Inc. for the current fiscal year.

 

Assuming that long-term investments totaled $3,000,000 throughout the
year and that total assets were $7,000,000 at the beginning of the current
fiscal year, determine the following: (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,
and (F) return on common stockholders' equity. (Round ratios and
percentages to one decimal place as appropriate.)

Property, plant, and equipment (net) $ 3,200,000 Liabilities: Current liabilities... Note payable, 6%, due in 15 years $1,000,000 2,000,000 Total liabilities ... Stockholders' equity: $ 3,000,000 $ 1,000,000 Preferred $10 stock, $100 par (no change during year)... Common stock, $10 par (no change during year) .... 2,000,000 Retained earnings: Balance, beginning of year..... $1,570,000 930,000 $2,500,000 $ 100,000 Net income... Preferred dividends Common dividends . Balance, end of year.. Total stockholders' equity . 400,000 500,000 2,000,000 $ 5,000,000 $18,900,000 $ 120,000 ........ Sales ... ...... Interest expense ...
Transcribed Image Text:Property, plant, and equipment (net) $ 3,200,000 Liabilities: Current liabilities... Note payable, 6%, due in 15 years $1,000,000 2,000,000 Total liabilities ... Stockholders' equity: $ 3,000,000 $ 1,000,000 Preferred $10 stock, $100 par (no change during year)... Common stock, $10 par (no change during year) .... 2,000,000 Retained earnings: Balance, beginning of year..... $1,570,000 930,000 $2,500,000 $ 100,000 Net income... Preferred dividends Common dividends . Balance, end of year.. Total stockholders' equity . 400,000 500,000 2,000,000 $ 5,000,000 $18,900,000 $ 120,000 ........ Sales ... ...... Interest expense ...
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