Measures of liquidity, Solvency, and Profitability The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was $ 55 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 $ 1,806,225   $ 1,533,375   Net income 408,800   314,100   Total $2,215,025   $ 1,847,475   Dividends:           On preferred stock $ 13,300   $ 13,300     On common stock 27,950   27,950       Total dividends $ 41,250   $ 41,250   Retained earnings, December 31 $ 2,173,775   $ 1,806,225   Marshall Inc. Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1        20Y2      20Y1 Sales $ 2,330,160   $ 2,146,930   Cost of goods sold 797,160   733,390   Gross profit $ 1,533,000   $ 1,413,540   Selling expenses $ 515,660   $ 632,210   Administrative expenses 439,270   371,300   Total operating expenses $954,930   $1,003,510   Income from operations $ 578,070   $ 410,030   Other revenue 30,430   26,170     $ 608,500   $ 436,200   Other expense (interest) 144,000   79,200   Income before income tax $ 464,500   $ 357,000   Income tax expense 55,700   42,900   Net income $ 408,800   $ 314,100   Marshall Inc. Comparative Balance Sheet December 31, 20Y2 and 20Y1        20Y2      20Y1 Assets   Current assets       Cash $ 460,270   $ 444,200     Marketable securities 696,620   736,110     Accounts receivable (net) 430,700   401,500     Inventories 321,200   248,200     Prepaid expenses 87,078   88,840       Total current assets $ 1,995,868   $ 1,918,850   Long-term investments 1,034,927   655,264   Property, plant, and equipment (net) 2,340,000   2,106,000   Total assets $ 5,370,795   $ 4,680,114   Liabilities Current liabilities $ 587,020   $ 1,073,889   Long-term liabilities:       Mortgage note payable, 8% $ 810,000   $ 0     Bonds payable, 8% 990,000   990,000       Total long-term liabilities $ 1,800,000   $ 990,000   Total liabilities $ 2,387,020   $ 2,063,889   Stockholders' Equity     Preferred $0.70 stock, $20 par $ 380,000   $ 380,000   Common stock, $10 par 430,000   430,000   Retained earnings 2,173,775   1,806,225   Total stockholders' equity $ 2,983,775   $ 2,616,225   Total liabilities and stockholders' equity $ 5,370,795   $ 4,680,114   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. 1.   Working capital $    2.   Current ratio     3.   Quick ratio     4.   Accounts receivable turnover     5.   Number of days' sales in receivables   days 6.   Inventory turnover     7.   Number of days' sales in inventory   days 8.   Ratio of fixed assets to long-term liabilities     9.   Ratio of liabilities to stockholders' equity     10.   Times interest earned     11.   Asset turnover     12.   Return on total assets   % 13.   Return on stockholders’ equity   % 14.   Return on common stockholders’ equity   % 15.   Earnings per share on common stock $    16.   Price-earnings ratio     17.  Dividends per share of common stock $    18.   Dividend yield   %   How do I solve this?

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ISBN:9781259964947
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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 $ 55 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 $ 1,806,225   $ 1,533,375  
Net income 408,800   314,100  
Total $2,215,025   $ 1,847,475  
Dividends:        
  On preferred stock $ 13,300   $ 13,300  
  On common stock 27,950   27,950  
    Total dividends $ 41,250   $ 41,250  
Retained earnings, December 31 $ 2,173,775   $ 1,806,225  



Marshall Inc.
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
       20Y2      20Y1
Sales $ 2,330,160   $ 2,146,930  
Cost of goods sold 797,160   733,390  
Gross profit $ 1,533,000   $ 1,413,540  
Selling expenses $ 515,660   $ 632,210  
Administrative expenses 439,270   371,300  
Total operating expenses $954,930   $1,003,510  
Income from operations $ 578,070   $ 410,030  
Other revenue 30,430   26,170  
  $ 608,500   $ 436,200  
Other expense (interest) 144,000   79,200  
Income before income tax $ 464,500   $ 357,000  
Income tax expense 55,700   42,900  
Net income $ 408,800   $ 314,100  



Marshall Inc.
Comparative Balance Sheet
December 31, 20Y2 and 20Y1
       20Y2      20Y1
Assets  
Current assets    
  Cash $ 460,270   $ 444,200  
  Marketable securities 696,620   736,110  
  Accounts receivable (net) 430,700   401,500  
  Inventories 321,200   248,200  
  Prepaid expenses 87,078   88,840  
    Total current assets $ 1,995,868   $ 1,918,850  
Long-term investments 1,034,927   655,264  
Property, plant, and equipment (net) 2,340,000   2,106,000  
Total assets $ 5,370,795   $ 4,680,114  
Liabilities
Current liabilities $ 587,020   $ 1,073,889  
Long-term liabilities:    
  Mortgage note payable, 8% $ 810,000   $ 0  
  Bonds payable, 8% 990,000   990,000  
    Total long-term liabilities $ 1,800,000   $ 990,000  
Total liabilities $ 2,387,020   $ 2,063,889  
Stockholders' Equity    
Preferred $0.70 stock, $20 par $ 380,000   $ 380,000  
Common stock, $10 par 430,000   430,000  
Retained earnings 2,173,775   1,806,225  
Total stockholders' equity $ 2,983,775   $ 2,616,225  
Total liabilities and stockholders' equity $ 5,370,795   $ 4,680,114  

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.

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

 

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