Measures of liquidity, solvency, and profitability The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was $82.60 on December 31, 20Y2. Marshall Inc.Comparative Retained Earnings StatementFor the Years Ended December 31, 20Y2 and 20Y1 Line Item Description 20Y2 20Y1 Retained earnings, January 1 $3,704,000 $3,264,000 Net income $600,000 $550,000 Dividends: On preferred stock (10,000) (10,000) On common stock (100,000) (100,000) Increase in retained earnings $490,000 $440,000 Retained earnings, December 31 $4,194,000 $3,704,000 Marshall Inc.Comparative Income StatementFor the Years Ended December 31, 20Y2 and 20Y1 Line Item Description 20Y2 20Y1 Sales $10,850,000 $10,000,000 Cost of goods sold (6,000,000) (5,450,000) Gross profit $4,850,000 $4,550,000 Selling expenses $(2,170,000) $(2,000,000) Administrative expenses (1,627,500) (1,500,000) Total operating expenses $(3,797,500) $(3,500,000) Operating income $1,052,500 $1,050,000 Other revenue and expense: Other revenue 99,500 20,000 Other expense (interest) (132,000) (120,000) Income before income tax expense $1,020,000 $950,000 Income tax expense (420,000) (400,000) Net income $600,000 $550,000 Marshall Inc.Comparative Balance SheetDecember 31, 20Y2 and 20Y1 Line Item Description 20Y2 20Y1 Assets Current assets: Cash $1,050,000 $950,000 Marketable securities 301,000 420,000 Accounts receivable (net) 585,000 500,000 Inventories 420,000 380,000 Prepaid expenses 108,000 20,000 Total current assets $2,464,000 $2,270,000 Long-term investments 800,000 800,000 Property, plant, and equipment (net) 5,760,000 5,184,000 Total assets $ 9,024,000 $8,254,000 Liabilities Current liabilities $ 880,000 $ 800,000 Long-term liabilities: Mortgage note payable, 6% $200,000 $0 Bonds payable, 4% 3,000,000 3,000,000 Total long-term liabilities $3,200,000 $3,000,000 Total liabilities $4,080,000 $3,800,000 Stockholders’ Equity Preferred 4% stock, $5 par $250,000 $250,000 Common stock, $5 par 500,000 500,000 Retained earnings 4,194,000 3,704,000 Total stockholders’ equity $4,944,000 $4,454,000 Total liabilities and stockholders’ equity $9,024,000 $8,254,000 Determine the following measures for 20Y2. Round to one decimal place, including percentages, except for per-share amounts, which should be rounded to the nearest cent. Line Item Description Answer Ratio Unit 1. Working Capital $fill in the blank 1 2. Current ratio fill in the blank 2 3. Quick ratio fill in the blank 3

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Problem 4PA: Measures of liquidity, solvency, and profitability The comparative financial statements of Marshall...
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Measures of liquidity, solvency, and profitability

The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was $82.60 on December 31, 20Y2.

Marshall Inc.Comparative Retained Earnings StatementFor the Years Ended December 31, 20Y2 and 20Y1

Line Item Description     20Y2     20Y1
Retained earnings, January 1 $3,704,000  $3,264,000 
Net income $600,000  $550,000 
Dividends:    
    On preferred stock (10,000) (10,000)
    On common stock (100,000) (100,000)
Increase in retained earnings $490,000  $440,000 
Retained earnings, December 31 $4,194,000  $3,704,000 

 

Marshall Inc.Comparative Income StatementFor the Years Ended December 31, 20Y2 and 20Y1

Line Item Description     20Y2     20Y1
Sales $10,850,000  $10,000,000 
Cost of goods sold (6,000,000) (5,450,000)
Gross profit $4,850,000  $4,550,000 
Selling expenses $(2,170,000) $(2,000,000)
Administrative expenses (1,627,500) (1,500,000)
Total operating expenses $(3,797,500) $(3,500,000)
Operating income $1,052,500  $1,050,000 
Other revenue and expense:    
     Other revenue 99,500  20,000 
     Other expense (interest) (132,000) (120,000)
Income before income tax expense $1,020,000  $950,000 
Income tax expense (420,000) (400,000)
Net income $600,000  $550,000 

 

Marshall Inc.Comparative Balance SheetDecember 31, 20Y2 and 20Y1

Line Item Description     20Y2     20Y1
Assets    
Current assets:    
    Cash $1,050,000 $950,000
    Marketable securities 301,000 420,000
    Accounts receivable (net) 585,000 500,000
    Inventories 420,000 380,000
    Prepaid expenses 108,000 20,000
        Total current assets $2,464,000 $2,270,000
Long-term investments 800,000 800,000
Property, plant, and equipment (net) 5,760,000 5,184,000
Total assets $ 9,024,000 $8,254,000
Liabilities    
Current liabilities $ 880,000 $ 800,000
Long-term liabilities:    
    Mortgage note payable, 6% $200,000 $0
    Bonds payable, 4% 3,000,000 3,000,000
        Total long-term liabilities $3,200,000 $3,000,000
Total liabilities $4,080,000 $3,800,000
Stockholders’ Equity    
Preferred 4% stock, $5 par $250,000 $250,000
Common stock, $5 par 500,000 500,000
Retained earnings 4,194,000 3,704,000
Total stockholders’ equity $4,944,000 $4,454,000
Total liabilities and stockholders’ equity $9,024,000 $8,254,000

Determine the following measures for 20Y2. Round to one decimal place, including percentages, except for per-share amounts, which should be rounded to the nearest cent.

Line Item Description Answer Ratio Unit
1. Working Capital $fill in the blank 1  
2. Current ratio fill in the blank 2  
3. Quick ratio fill in the blank 3  
4. Accounts receivable turnover fill in the blank 4  
5. Days’ sales in receivables fill in the blank 5 days
6. Inventory turnover fill in the blank 6  
7. Days’ sales in inventory fill in the blank 7 days
8. Ratio of fixed assets to long-term liabilities fill in the blank 8  
9. Ratio of liabilities to stockholders’ equity fill in the blank 9  
10. Times interest earned fill in the blank 10  
11. Asset turnover fill in the blank 11  
12. Return on total assets fill in the blank 12 %
13. Return on stockholders’ equity fill in the blank 13 %
14. Return on common stockholders’ equity fill in the blank 14 %
15. Earnings per share on common stock $fill in the blank 15  
16. Price-earnings ratio fill in the blank 16  
17. Dividends per share of common stock $fill in the blank 17  
18. Dividend yield fill in the blank 18 %
 

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