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. 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

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. 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

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 $ 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.

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

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