Assignment 6.1: Chapter 14 Homework

1. Question Content Area

   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)						$2,194,500
   Liabilities:
   	Current liabilities			$231,000
   	Note payable, 6%, due in 15 years			1,155,000
   	Total liabilities					$1,386,000
   Stockholders' equity:
   	Preferred $4 stock, $100 par (no change during year)					$2,079,000
   	Common stock, $10 par (no change during year)					2,079,000
   Retained earnings:
   	Balance, beginning of year	$2,218,000
   	Net income	889,000		$3,107,000
   	Preferred dividends	$83,160
   	Common dividends	251,840		335,000
   	Balance, end of year					2,772,000
   Total stockholders' equity						$6,930,000
   Sales						$20,145,000
   Interest expense						$69,300

   Assuming that long-term investments totaled $4,158,000 throughout the year and that total assets were $7,900,000 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	? %