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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) | $1,455,400 | |||||
Liabilities: | ||||||
Current liabilities | $152,000 | |||||
Note payable, 6%, due in 15 years | 766,000 | |||||
Total liabilities | $918,000 | |||||
Stockholders' equity: | ||||||
Preferred $2 stock, $100 par (no change during year) | $1,377,000 | |||||
Common stock, $10 par (no change during year) | 1,377,000 | |||||
Retained earnings: | ||||||
Balance, beginning of year | $1,468,000 | |||||
Net income | 576,000 | $2,044,000 | ||||
Preferred dividends | $27,540 | |||||
Common dividends | 180,460 | 208,000 | ||||
Balance, end of year | 1,836,000 | |||||
Total stockholders' equity | $4,590,000 | |||||
Sales | $25,241,350 | |||||
Interest expense | $45,960 |
Assuming that total assets were $5,233,000 at the beginning of the current fiscal year, determine the following. When required, round to one decimal place.
Part C
Asset turnover = sales / average total assets
Total assets (current year) = total liabilities + total stockholders’ equity = 918000+4590000 = $5508000
Asset turnover = 25241350/((5233000+5508000)/2) = 4.7
Part D
Return on total assets = (net income + interest)/ average total assets = (576000+45960)/ ((5233000+5508000)/2) = 11.6%
Part E
Return on stockholders’ equity = net income /average stockholders’ equity =576000/((0+4590000)/2)= 25.1%
Part F
Return on stockholders’ (interest expense- preferred dividend) /average stockholders’ equity = (57600—27540) /((0+4590000)/2)= 1.31%
Please help and show working. Thank You! Six Measures of Solvency or Profitability The following data...
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