Measures of liquidity, solvency, and profitabilityThe 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 20Y220Y1Retained earnings, January 1$3,704,000$3,264,000Net income$ 600,000$ 550,000Dividends:  On preferred stock(10,000)(10,000)On common stock(100,000)(100,000)Increase in retained earnings$ 490,000$ 440,000Retained earnings, December 31$4,194,000$3,704,000  Marshall Inc.Comparative Income StatementFor the Years Ended December 31, 20Y2 and 20Y1 20Y220Y1Sales$ 10,850,000$10,000,000Cost of goods sold(6,000,000)(5,450,000)Gross profit$ 4,850,000$ 4,550,000Selling 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$ 1,050,000Other revenue and expense:  Other revenue99,50020,000Other expense (interest)(132,000)(120,000)Income before income tax expense$ 1,020,000$ 950,000Income tax expense(420,000)(400,000)Net income$ 600,000$ 550,000    Marshall Inc.Comparative Balance SheetDecember 31, 20Y2 and 20Y1 20Y220Y1Assets Current assets:  Cash$1,050,000$ 950,000Marketable securities301,000420,000Accounts receivable (net)585,000500,000Inventories420,000380,000Prepaid expenses108,00020,000Total current assets$ 2,464,000$2,270,000Long-term investments800,000800,000Property, plant, and equipment (net)5,760,0005,184,000Total assets$ 9,024,000$8,254,000Liabilities Current liabilities$ 880,000$ 800,000Long-term liabilities:  Mortgage note payable, 6%$ 200,000$ 0Bonds payable, 4%3,000,0003,000,000Total long-term liabilities$ 3,200,000$3,000,000Total liabilities$ 4,080,000$3,800,000Stockholders’ Equity Preferred 4% stock, $5 par$ 250,000$ 250,000Common stock, $5 par500,000500,000Retained earnings4,194,0003,704,000Total stockholders’ equity$ 4,944,000$4,454,000Total liabilities and stockholders’ equity$ 9,024,000$8,254,000Determine 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.whats the asset turn over?

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Asked Aug 8, 2019
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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 Statement
For the Years Ended December 31, 20Y2 and 20Y1
  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 Statement
For the Years Ended December 31, 20Y2 and 20Y1
  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 Sheet
December 31, 20Y2 and 20Y1
  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.

whats the asset turn over?

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Expert Answer

Step 1

Asset Turnover ratio: It is an efficacy ratio which measure the value of Companies sales in comparison to the total average assets invested. Higher the ratio more efficient the organization and vice-versa.

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Net Sales Assets Turnover Ratio Average Total Assets opening total assets+closing total assets Average total assets 2

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Step 2

Computations for the year 2012

Given Information:

Net Sales - $10,850,000

Opening Total...

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Computations 8254000 9024000 Average Total Assets 2 S 8,639,000 Therefore 10850000 Assets Turnover Ratio 8639000 =1.2559 Assets Turnover Ratio is 1.3 times

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