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EX 17-19 Six measures of solvency or profitability
The following data were taken from the financial statements of Ares Inc. for the current fiscal year. Assuming that long-term investments totaled $3,000,000 throughout the year and that total assets were $6,250,000 at the beginning of the current fiscal year, determine the following: (a) ratio of fixed assets to long-term liabilities, (b) ratio of liabilities to stockholders’ equity, (c) ratio of net sales to assets, (d) rate earned on total assets, (e) rate earned on stockholders’ equity, and (f) rate earned on common stockholders’ equity. Round to one decimal place.
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|
Property, plant, and equipment (net) |
 |  |
$ 2,700,000 |
|
Liabilities: |
 |  |  |
|
Current liabilities |
 |
$ 666,500 |
 |
|
Mortgage note payable, 8%, issued 2001, due 2017 |
 |
1,800,000 |
 |
|
Total liabilities |
 |  |
$ 2,466,500 |
|
Stockholders’ equity: |
 |  |  |
|
Preferred $10 stock, $100 par (no change during year) |
 |  |
$ 1,200,000 |
|
Common stock, $10 par (no change during year) |
 |  |
1,000,000 |
|
Retained earnings: |
 |  |  |
|
Balance, beginning of year |
$2,203,000 |
 |  |
|
Net income |
750,000 |
$2,953,000 |
 |
|
Preferred dividends |
$ 120,000 |
 |  |
|
Common dividends |
100,000 |
220,000 |
 |
|
Balance, end of year |
 |  |
2,733,000 |
|
Total stockholders’ equity |
 |  |
$ 4,933,000 |
|
Net sales |
 |  |
$17,211,375 |
|
Interest expense |
 |  |
$ 144,000 |