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?

Asked Aug 8, 2019

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
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
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
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?


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

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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