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

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)						$1,214,200
Liabilities:
	Current liabilities			$188,000
	Note payable, 6%, due in 15 years			934,000
	Total liabilities					$1,122,000
Stockholders' equity:
	Preferred $4 stock, $100 par (no change during year)					$673,200
	Common stock, $10 par (no change during year)					673,200
Retained earnings:
	Balance, beginning of year	$718,000
	Net income	278,000		$996,000
	Preferred dividends	$26,928
	Common dividends	71,472		98,400
	Balance, end of year					897,600
Total stockholders' equity						$2,244,000
Sales						$7,515,300
Interest expense						$56,040

Assuming that long-term investments totaled $1,683,000 throughout the year and that total assets were $3,198,000 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	%

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) $1,214,200 Liabilities: Current liabilities $188,000 Note payable, 6%, due in 15 years 934,000 Total liabilities $1,122,000 Stockholders' equity: Preferred $4 stock, $100 par (no change during year) $673,200 Common stock, $10 par (no change during year) 673,200 Retained earnings: Balance, beginning of year $718,000 Net income 278,000 $996,000 Preferred dividends $26,928 Common dividends 71,472 98,400 Balance, end of year 897,600 Total stockholders' equity $2,244,000 Sales $7,515,300 Interest expense $56,040 Assuming that long-term investments totaled $1,683,000 throughout the year and that total assets were $3,198,000 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 1.3 b. Ratio of liabilities to stockholders' equity 0.5 C. Asset turnover 4.7 d. Return on total assets % e. Return on stockholders' equity % f. Return on common stockholders' equity % 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, excluding long-term investments. 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. Learning Objective 4 and Learning Objective 5