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: $1,801,800 Current liabilities Note payable, 6%, due in 15 years Total liabilities $171,000 858,000 $1,029,000 Stockholders' equity: Preferred $4 stock, $100 par (no change during year) Common stock, $10 par (no change during year) $1,543,500 1,543,500 Retained earnings: Balance, beginning of year Net income Preferred dividends Common dividends Balance, end of year $1,646,000 486,000 $2,132,000 $61,740 74,000 12,260 2,058,000 $5,145,000 $27,689,700 $51,480 Total stockholders' equity Sales Interest expense Assuming that total assets were $5,865,000 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 2.1 $27,689,700 Sales Interest expense Assuming that total assets were $5,865,000 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 $51,480 2.1 0.2 7.2 X 12.7 | X % 9.4 X % 11.8 X % Feedback Check My Work a. Divide property, plant, and equipment (net) by long-term liabilities b. Divide total liabilities by total stockholders'equity C. Divide sales by average total assets. Average total assets = Beginning total assets + Ending total assets-2. To find ending total assets, use the accounting equation and substitute ending liabilities + stockholders'equity for the amount. d. Divide the sum of net income plus interest expense by average total assets. Average total assets (Beginning total assets+Ending total assets) +2. To find ending total assets, use the accounting equation and substitute ending liabilities + stockholders'equity for the amount. e. Divide net income by average total stockholders'equity. Average total stockholders'equity (Beginning total stockholders'equity+ Ending total stockholders'equity) 2. f. Divide net income minus preferred dividends by average common stockholders'equity. Common stockholders'equity = Common stock + Retained earnings. Average common stockholders'equity (Beginning common stockholders'equity+Ending common stockholders'equity) + 2