Six Measures of Solvency or Profitability The following data were taken from the

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) Liabilities: $1,123,500 Current liabilities Note payable, 696, due in 15 years Total liabilities Stockholders' equity $151,000 749,000 $900,000 Preferred $4 stock, $100 par (no change during year) Common stock, $10 par (no change during year) $1,350,000 1,350,000 Retained earnings: $1,440,000 Balance, beginning of year Net income Preferred dividends Common dividends Balance, end of year 451,000 $1,891,000 $54,000 37,000 91,000 1,800,000 $4,500,000 $30,010,500 Sales 2 more Check My Work uses remaining 40

Explanation / Answer

Particulars Ratio a Fixed Assets $       1,123,500 b Long term Liabilities $         749,000 c Fixed asset to long term liabilities (a/b)                  1.50 d Liabilities $         900,000 f Stock holders Equity $       4,500,000 g ratio of liabilities to stockholders equity (d/f)                  0.20 h Sales $     30,010,500 i Fixed Assets $       1,123,500 j Asset turnover ratio (h/i)                 26.71 k Net Income $         451,000 l Total Asset $       5,400,000 m Return on total Asset (k/l) 8.35% n Net Income $         451,000 o Total Equity $       4,500,000 p Return on stockholders equity (n/o) 10.02% q Net Income - Dividend $         397,000 r Total Common stock $       3,150,000 s Return on common stockholders equity (q/r) 12.60% a Fixed asset to long term liabilities                  1.50 b ratio of liabilities to stockholders equity                  0.20 c Asset turnover                 26.71 d Return on total Asset 8.35% e Return on stockholders equity 10.02% f Return on common stockholders equity 12.60%

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