Measures of liquidity, Solvency, and Profitability

The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was $ 68 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 $2,207,700 $1,875,700

Net income 516,800 384,200

Total $2,724,500 $2,259,900

Dividends:

On preferred stock $6,300 $6,300

On common stock 45,900 45,900

Total dividends $52,200 $52,200

Retained earnings, December 31 $2,672,300 $2,207,700

Marshall Inc.

Comparative Income Statement

For the Years Ended December 31, 20Y2 and 20Y1

   20Y2    20Y1

Sales $3,066,000 $2,824,840

Cost of goods sold 1,016,160 934,870

Gross profit $2,049,840 $1,889,970

Selling expenses $715,340 $874,570

Administrative expenses 609,370 513,630

Total operating expenses $1,324,710 $1,388,200

Income from operations $725,130 $501,770

Other revenue 38,170 32,030

$763,300 $533,800

Other expense (interest) 176,000 96,800

Income before income tax $587,300 $437,000

Income tax expense 70,500 52,800

Net income $516,800 $384,200

Marshall Inc.

Comparative Balance Sheet

December 31, 20Y2 and 20Y1

   20Y2    20Y1

Assets

Current assets

Cash $443,160 $540,320

Marketable securities 670,720 895,380

Accounts receivable (net) 525,600 496,400

Inventories 394,200 306,600

Prepaid expenses 83,840 108,060

Total current assets $2,117,520 $2,346,760

Long-term investments 1,560,620 803,047

Property, plant, and equipment (net) 2,860,000 2,574,000

Total assets $6,538,140 $5,723,807

Liabilities

Current liabilities $705,840 $1,346,107

Long-term liabilities:

Mortgage note payable, 8% $990,000 $0

Bonds payable, 8% 1,210,000 1,210,000

Total long-term liabilities $2,200,000 $1,210,000

Total liabilities $2,905,840 $2,556,107

Stockholders' Equity

Preferred $0.70 stock, $50 par $450,000 $450,000

Common stock, $10 par 510,000 510,000

Retained earnings 2,672,300 2,207,700

Total stockholders' equity $3,632,300 $3,167,700

Total liabilities and stockholders' equity $6,538,140 $5,723,807

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.

Answer 13, 14, 15, 16, 17 and 18 only.

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.   Number of days' sales in receivables fill in the blank 5 days

6.   Inventory turnover fill in the blank 6

7.   Number of 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 %

Question

Measures of liquidity, Solvency, and Profitability

The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was $ 68 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	$2,207,700		$1,875,700
Net income	516,800		384,200
Total	$2,724,500		$2,259,900
Dividends:
	On preferred stock	$6,300		$6,300
	On common stock	45,900		45,900
		Total dividends	$52,200		$52,200
Retained earnings, December 31	$2,672,300		$2,207,700

Marshall Inc.
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
	20Y2	20Y1
Sales	$3,066,000		$2,824,840
Cost of goods sold	1,016,160		934,870
Gross profit	$2,049,840		$1,889,970
Selling expenses	$715,340		$874,570
Administrative expenses	609,370		513,630
Total operating expenses	$1,324,710		$1,388,200
Income from operations	$725,130		$501,770
Other revenue	38,170		32,030
	$763,300		$533,800
Other expense (interest)	176,000		96,800
Income before income tax	$587,300		$437,000
Income tax expense	70,500		52,800
Net income	$516,800		$384,200

Marshall Inc.
Comparative Balance Sheet
December 31, 20Y2 and 20Y1
	20Y2	20Y1
Assets
Current assets
	Cash	$443,160		$540,320
	Marketable securities	670,720		895,380
	Accounts receivable (net)	525,600		496,400
	Inventories	394,200		306,600
	Prepaid expenses	83,840		108,060
		Total current assets	$2,117,520		$2,346,760
Long-term investments	1,560,620		803,047
Property, plant, and equipment (net)	2,860,000		2,574,000
Total assets	$6,538,140		$5,723,807
Liabilities
Current liabilities	$705,840		$1,346,107
Long-term liabilities:
	Mortgage note payable, 8%	$990,000		$0
	Bonds payable, 8%	1,210,000		1,210,000
		Total long-term liabilities	$2,200,000		$1,210,000
Total liabilities	$2,905,840		$2,556,107
Stockholders' Equity
Preferred $0.70 stock, $50 par	$450,000		$450,000
Common stock, $10 par	510,000		510,000
Retained earnings	2,672,300		2,207,700
Total stockholders' equity	$3,632,300		$3,167,700
Total liabilities and stockholders' equity	$6,538,140		$5,723,807

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.

Answer 13, 14, 15, 16, 17 and 18 only.

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. Number of days' sales in receivables	fill in the blank 5	days
6. Inventory turnover	fill in the blank 6
7. Number of 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	%

Accepted Answer

Ration analysis 
Divider per share= dividend÷share of stock