The following data were taken from the financial statements of Gates Inc. for the current fiscal year.

Assuming 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.

Transcribed Image Text:

Property, plant, and equipment (net) $ 3,200,000 .... Liabilities: Current liabilities... $1,000,000 Note payable, 6%, due in 15 years 2,000,000 Total liabilities . $ 3,000,000 Stockholders' equity: Preferred $10 stock, $100 par (no change during year)... $ 1,000,000 Common stock, $10 par (no change during year). Retained earnings: 2,000,000 Balance, beginning of year. $1,570,000 Net income.... 930,000 $2,500,000 Preferred dividends $ 100,000 Common dividends 400,000 500,000 Balance, end of year. 2,000,000 Total stockholders'equity. $ 5,000,000 Sales ... $18,750,000 $ 120,000 Interest expense Property, plant, and equipment (net) $ 3,200,000 .... Liabilities: Current liabilities... $1,000,000 Note payable, 6%, due in 15 years 2,000,000 Total liabilities . $ 3,000,000 Stockholders' equity: Preferred $10 stock, $100 par (no change during year)... $ 1,000,000 Common stock, $10 par (no change during year). Retained earnings: 2,000,000 Balance, beginning of year. $1,570,000 Net income.... 930,000 $2,500,000 Preferred dividends $ 100,000 Common dividends 400,000 500,000 Balance, end of year. 2,000,000 Total stockholders'equity. $ 5,000,000 Sales ... $18,750,000 $ 120,000 Interest expense