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ID: 2594710 • Letter: G
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gnment Man 't or 'nvoker -assignmentso akessignmentsession Locator = assignment take&inprogress;= alse nd Problems eBook Calculator Print Item 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 $2,044,000 Current liabilities Note payable, 6%, due in 15 years Total liabilities $205,000 1,022,000 $1,227,000 Stockholders' equity: Preferred $2 stock, $100 par (no change during year) $736,200 Common stock, $10 par (no change during year) 736,200 Retained earnings: $786,000 Balance, beginning of year Net income Preferred dividends Common dividends Balance, end of year 310,000 $1,096,000 $14,724 99,676 114,400 981,600 $2.454,000 $18,303,900 Total stockholders' equity Sales Check My Work 2 more Check My Won uses remaining Previous 2 more Check My Woric uses remaining 142 PMExplanation / Answer
a. Ratio of fixed assets to long term liabilities = Fixed assets / Long term liabilities
= $2044000 / $1022000
= 2 times
b. Ratio of liabilities to stockholders equity = Total liabilities / shareholders equity
= $1227000 / $2454000
= 0.5 times
c. Asset turnover = Net sales / Average total assets
= $18303900 / ($3497000 + $3681000)/2
= $18303900 / $3589000
= 5.1 times
d. Return on total assets = Net income / Average total assets
= $310000 / $3589000
= 8.64%
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