Measures of liquidity, Solvency, and Profitability The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was $ 61 on December 31, 20Y2. Marshall Inc. Comparative Retained Earnings Statement For the Years Ended December 31, 20Y2 and 20Y1        20Y2      20Y1 Retained earnings, January 1 $3,350,500    $2,822,200    Net income 748,800   578,100   Dividends:           On preferred stock (9,800)   (9,800)     On common stock (40,000)   (40,000)   Retained earnings, December 31 $4,049,500    $3,350,500    Marshall Inc. Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1       20Y2     20Y1 Sales $4,270,500   $3,934,620   Cost of merchandise sold 1,608,920   1,480,210   Gross profit $2,661,580   $2,454,410   Selling expenses $844,790   $1,058,190   Administrative expenses 719,640   621,470   Total operating expenses $1,564,430   $1,679,660   Income from operations $1,097,150   $774,750   Other revenue and expense:             Other revenue 57,750   49,450       Other expense (interest) (304,000)   (167,200)   Income before income tax expense $850,900   $657,000   Income tax expense 102,100   78,900   Net income $748,800   $578,100   Marshall Inc. Comparative Balance Sheet December 31, 20Y2 and 20Y1        20Y2      20Y1 Assets   Current assets:       Cash $736,150   $761,910     Marketable securities 1,114,170   1,262,590     Accounts receivable (net) 846,800   795,700     Inventories 627,800   481,800     Prepaid expenses 139,275   152,380       Total current assets $3,464,195   $3,454,380   Long-term investments 2,139,855   524,939   Property, plant, and equipment (net) 4,940,000   4,446,000   Total assets $10,544,050   $8,425,319   Liabilities Current liabilities $1,194,550   $1,484,819   Long-term liabilities:       Mortgage note payable, 8% $1,710,000   $0     Bonds payable, 8% 2,090,000   2,090,000       Total long-term liabilities $3,800,000   $2,090,000   Total liabilities $4,994,550   $3,574,819   Stockholders' Equity     Preferred $0.70 stock, $50 par $700,000   $700,000   Common stock, $10 par 800,000   800,000   Retained earnings 4,049,500   3,350,500   Total stockholders' equity $5,549,500   $4,850,500   Total liabilities and stockholders' equity $10,544,050   $8,425,319   Required: Determine the following measures for 20Y2, rounding to one decimal place, except for dollar amounts, which should be rounded to the nearest cent. Use the rounded answer of the requirement for subsequent requirement, if required. Assume 365 days a year

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Chapter1: Financial Statements And Business Decisions
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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 $ 61 on December 31, 20Y2.

Marshall Inc.
Comparative Retained Earnings Statement
For the Years Ended December 31, 20Y2 and 20Y1
       20Y2      20Y1
Retained earnings, January 1 $3,350,500    $2,822,200   
Net income 748,800   578,100  
Dividends:        
  On preferred stock (9,800)   (9,800)  
  On common stock (40,000)   (40,000)  
Retained earnings, December 31 $4,049,500    $3,350,500   



Marshall Inc.
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
      20Y2     20Y1
Sales $4,270,500   $3,934,620  
Cost of merchandise sold 1,608,920   1,480,210  
Gross profit $2,661,580   $2,454,410  
Selling expenses $844,790   $1,058,190  
Administrative expenses 719,640   621,470  
Total operating expenses $1,564,430   $1,679,660  
Income from operations $1,097,150   $774,750  
Other revenue and expense:        
    Other revenue 57,750   49,450  
    Other expense (interest) (304,000)   (167,200)  
Income before income tax expense $850,900   $657,000  
Income tax expense 102,100   78,900  
Net income $748,800   $578,100  



Marshall Inc.
Comparative Balance Sheet
December 31, 20Y2 and 20Y1
       20Y2      20Y1
Assets  
Current assets:    
  Cash $736,150   $761,910  
  Marketable securities 1,114,170   1,262,590  
  Accounts receivable (net) 846,800   795,700  
  Inventories 627,800   481,800  
  Prepaid expenses 139,275   152,380  
    Total current assets $3,464,195   $3,454,380  
Long-term investments 2,139,855   524,939  
Property, plant, and equipment (net) 4,940,000   4,446,000  
Total assets $10,544,050   $8,425,319  
Liabilities
Current liabilities $1,194,550   $1,484,819  
Long-term liabilities:    
  Mortgage note payable, 8% $1,710,000   $0  
  Bonds payable, 8% 2,090,000   2,090,000  
    Total long-term liabilities $3,800,000   $2,090,000  
Total liabilities $4,994,550   $3,574,819  
Stockholders' Equity    
Preferred $0.70 stock, $50 par $700,000   $700,000  
Common stock, $10 par 800,000   800,000  
Retained earnings 4,049,500   3,350,500  
Total stockholders' equity $5,549,500   $4,850,500  
Total liabilities and stockholders' equity $10,544,050   $8,425,319  

Required:

Determine the following measures for 20Y2, rounding to one decimal place, except for dollar amounts, which should be rounded to the nearest cent. Use the rounded answer of the requirement for subsequent requirement, if required. Assume 365 days a year

4.
Return on common stockholders' equity
%
5. Earnings per share on common stock
6. Price-earnings ratio
Transcribed Image Text:4. Return on common stockholders' equity % 5. Earnings per share on common stock 6. Price-earnings ratio
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