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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 $3,704,000 $ 600,000 Retained earnings, January 1 Net income Dividends: On preferred stock On common stock Increase in retained earnings Retained earnings, December 31 Sales Cost of goods sold Gross profit Selling expenses Administrative expenses Total operating expenses Operating income Other revenue and expense: (10,000) (100,000) $ 490,000 $4,194,000 Marshall Inc. Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 20Y2 Other revenue Other expense (interest) Income before income tax expense Income tax expense Net income 20Y1 $3,264,000 $ 550,000 (10,000) (100,000) $ 440,000 $3,704,000 $ 10,850,000 (6,000,000) $ 4,850,000 $ (2,170,000) (1,627,500) $(3,797,500) $ 1,052,500 99,500 (132,000) $ 1,020,000 (420,000) $ 600,000 20Y1 $10,000,000 (5,450,000) $ 4,550,000 $ (2,000,000) (1,500,000) $ (3,500,000) $ 1,050,000 20,000 (120,000) $ 950,000 (400,000) $ 550,000

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 $3,704,000 $ 600,000 Retained earnings, January 1 Net income Dividends: On preferred stock On common stock Increase in retained earnings Retained earnings, December 31 Sales Cost of goods sold Gross profit Selling expenses Administrative expenses Total operating expenses Operating income Other revenue and expense: (10,000) (100,000) $ 490,000 $4,194,000 Marshall Inc. Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 20Y2 Other revenue Other expense (interest) Income before income tax expense Income tax expense Net income 20Y1 $3,264,000 $ 550,000 (10,000) (100,000) $ 440,000 $3,704,000 $ 10,850,000 (6,000,000) $ 4,850,000 $ (2,170,000) (1,627,500) $(3,797,500) $ 1,052,500 99,500 (132,000) $ 1,020,000 (420,000) $ 600,000 20Y1 $10,000,000 (5,450,000) $ 4,550,000 $ (2,000,000) (1,500,000) $ (3,500,000) $ 1,050,000 20,000 (120,000) $ 950,000 (400,000) $ 550,000

Financial Accounting
Financial Accounting
15th Edition
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter17: Financial Statement Analysis
Section: Chapter Questions
Problem 4PA: Measures of liquidity, solvency, and profitability The comparative financial statements of Marshall...
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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 $3,704,000 $ 600,000 Retained earnings, January 1 Net income Dividends: On preferred stock On common stock Increase in retained earnings Retained earnings, December 31 Sales Cost of goods sold Gross profit Selling expenses Administrative expenses Total operating expenses (10,000) (100,000) $ 490,000 $4,194,000 Marshall Inc. Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 20Y2 Operating income Other revenue and expense: Other revenue Other expense (interest) Income before income tax expense Income tax expense Net income 20Y1 $3,264,000 $ 550,000 (10,000) (100,000) $ 440,000 $3,704,000 $ 10,850,000 (6,000,000) $ 4,850,000 $ (2,170,000) (1,627,500) $(3,797,500) $ 1,052,500 99,500 (132,000) $ 1,020,000 (420,000) $ 600,000 20Y1 $10,000,000 (5,450,000) $ 4,550,000 $ (2,000,000) (1,500,000) $ (3,500,000) $ 1,050,000 20,000 (120,000) $ 950,000 (400,000) $ 550,000
Transcribed Image Text: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 $3,704,000 $ 600,000 Retained earnings, January 1 Net income Dividends: On preferred stock On common stock Increase in retained earnings Retained earnings, December 31 Sales Cost of goods sold Gross profit Selling expenses Administrative expenses Total operating expenses (10,000) (100,000) $ 490,000 $4,194,000 Marshall Inc. Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 20Y2 Operating income Other revenue and expense: Other revenue Other expense (interest) Income before income tax expense Income tax expense Net income 20Y1 $3,264,000 $ 550,000 (10,000) (100,000) $ 440,000 $3,704,000 $ 10,850,000 (6,000,000) $ 4,850,000 $ (2,170,000) (1,627,500) $(3,797,500) $ 1,052,500 99,500 (132,000) $ 1,020,000 (420,000) $ 600,000 20Y1 $10,000,000 (5,450,000) $ 4,550,000 $ (2,000,000) (1,500,000) $ (3,500,000) $ 1,050,000 20,000 (120,000) $ 950,000 (400,000) $ 550,000
Current assets: Cash Prepaid expenses Marshall Inc. Comparative Balance Sheet December 31, 20Y2 and 20Y1 Marketable securities Accounts receivable (net) Inventories Current liabilities Long-term liabilities: Total current assets Long-term investments Property, plant, and equipment (net) Total assets Assets Total long-term liabilities Total liabilities Mortgage note payable, 6% Bonds payable, 4% Liabilities Preferred 4% stock, $5 par Common stock, $5 par Retained earnings Stockholders' Equity 1. Working Capital 2. Current ratio 3. Quick ratio 4. Accounts receivable turnover 5. Number of days' sales in receivables 6. Inventory turnover 7. Number of days' sales in inventory 8. Ratio of fixed assets to long-term liabilities 9. Ratio of liabilities to stockholders' equity 10. Times interest earned 1. Asset tur 20Y2 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 $1,050,000 301,000 585,000 420,000 108,000 $ 2,464,000 800,000 5,760,000 $ 9,024,000 $ 880,000 $ 200,000 3,000,000 $ 3,200,000 $ 4,080,000 $ 250,000 500,000 4,194,000 $ 4,944,000 $ 9,024,000 % % % 20Y1 % $ 950,000 420,000 Total stockholders' equity Total liabilities and stockholders' equity 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. 500,000 380,000 20,000 $2,270,000 800,000 5,184,000 $8,254,000 $ 800,000 $0 3,000,000 $3,000,000 $3,800,000 $ 250,000 500,000 3,704,000 $4,454,000 $8,254,000
Transcribed Image Text:Current assets: Cash Prepaid expenses Marshall Inc. Comparative Balance Sheet December 31, 20Y2 and 20Y1 Marketable securities Accounts receivable (net) Inventories Current liabilities Long-term liabilities: Total current assets Long-term investments Property, plant, and equipment (net) Total assets Assets Total long-term liabilities Total liabilities Mortgage note payable, 6% Bonds payable, 4% Liabilities Preferred 4% stock, $5 par Common stock, $5 par Retained earnings Stockholders' Equity 1. Working Capital 2. Current ratio 3. Quick ratio 4. Accounts receivable turnover 5. Number of days' sales in receivables 6. Inventory turnover 7. Number of days' sales in inventory 8. Ratio of fixed assets to long-term liabilities 9. Ratio of liabilities to stockholders' equity 10. Times interest earned 1. Asset tur 20Y2 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 $1,050,000 301,000 585,000 420,000 108,000 $ 2,464,000 800,000 5,760,000 $ 9,024,000 $ 880,000 $ 200,000 3,000,000 $ 3,200,000 $ 4,080,000 $ 250,000 500,000 4,194,000 $ 4,944,000 $ 9,024,000 % % % 20Y1 % $ 950,000 420,000 Total stockholders' equity Total liabilities and stockholders' equity 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. 500,000 380,000 20,000 $2,270,000 800,000 5,184,000 $8,254,000 $ 800,000 $0 3,000,000 $3,000,000 $3,800,000 $ 250,000 500,000 3,704,000 $4,454,000 $8,254,000
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