FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Six Measures of Solvency or Profitability

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

Property, plant, and equipment (net)         $3,040,000
Liabilities:          
  Current liabilities     $1,200,000    
  Note payable, 6%, due in 15 years     1,600,000    
  Total liabilities         $2,800,000
Stockholders’ equity:          
  Preferred $10 stock, $100 par (no change during year)         $800,000
  Common stock, $10 par (no change during year)         1,600,000
Retained earnings:          
  Balance, beginning of year $1,072,000        
  Net income 928,000   $2,000,000    
  Preferred dividends $80,000        
  Common dividends 320,000   400,000    
  Balance, end of year         1,600,000
Total stockholders’ equity         $4,000,000
Sales         $17,920,000
Interest expense         $96,000

Assuming that total assets were $6,000,000 at the beginning of the current fiscal year, determine the following: Round your answers to one decimal place.

a.  Ratio of fixed assets to long-term liabilities fill in the blank 1
b.  Ratio of liabilities to stockholders' equity fill in the blank 2
c.  Asset turnover fill in the blank 3
d.  Return on total assets fill in the blank 4%
e.  Return on stockholders’ equity fill in the blank 5%
f.  Return on common stockholders’ equity fill in the blank 6%
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how did you find the average common stockholders' equity for the final question?

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Where did you get the 6 million in assets turnover problem? 

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how did you find the average common stockholders' equity for the final question?

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Where did you get the 6 million in assets turnover problem? 

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