Measures of liquidity, Solvency, and Profitability The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was $ 67 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 $4,170,350 $3,535,650 Net income 908,800 724,200 Total $5,079,150 $4,259,850 Dividends: On preferred stock $11,900 $11,900 On common stock 77,600 77,600 Total dividends $89,500 $89,500 Retained earnings, December 31 $4,989,650 $4,170,350 Marshall Inc. Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Y1 Sales $5,124,600 $4,721,550 Cost of goods sold 1,819,160 1,673,630 Gross profit $3,305,440 $3,047,920 Selling expenses $1,086,900 $1,325,740 Administrative expenses 925,880 778,610 Total operating expenses $2,012,780 $2,104,350 Income from operations $1,292,660 $943,570 Other revenue 68,040 60,230 $1,360,700 $1,003,800 Other expense (interest) 328,000 180,800 Income before income tax $1,032,700 $823,000 Income tax expense 123,900 98,800 Net income $908,800 $724,200 Marshall Inc. Comparative Balance Sheet December 31, 20Y2 and 20Y1 20Y2 20Y1 Assets Current assets Cash $1,013,530 $917,700 Marketable securities 1,533,990 1,520,760 Accounts receivable (net) 978,200 919,800 Inventories 730,000 569,400 Prepaid expenses 191,756 183,540 Total current assets $4,447,476 $4,111,200 Long-term investments 2,479,894 1,119,115 Property, plant, and equipment (net) 5,330,000 4,797,000 Total assets $12,257,370 $10,027,315 Liabilities Current liabilities $1,347,720 $1,776,965 Long-term liabilities: Mortgage note payable, 8% $1,840,000 $0 Bonds payable, 8% 2,260,000 2,260,000 Total long-term liabilities $4,100,000 $2,260,000 Total liabilities $5,447,720 $4,036,965 Stockholders' Equity Preferred $0.70 stock, $50 par $850,000 $850,000 Common stock, $10 par 970,000 970,000 Retained earnings 4,989,650 4,170,350 Total stockholders' equity $6,809,650 $5,990,350 Total liabilities and stockholders' equity $12,257,370 $10,027,315 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

Measures of liquidity, Solvency, and Profitability The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was $ 67 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 $4,170,350 $3,535,650 Net income 908,800 724,200 Total $5,079,150 $4,259,850 Dividends: On preferred stock $11,900 $11,900 On common stock 77,600 77,600 Total dividends $89,500 $89,500 Retained earnings, December 31 $4,989,650 $4,170,350 Marshall Inc. Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Y1 Sales $5,124,600 $4,721,550 Cost of goods sold 1,819,160 1,673,630 Gross profit $3,305,440 $3,047,920 Selling expenses $1,086,900 $1,325,740 Administrative expenses 925,880 778,610 Total operating expenses $2,012,780 $2,104,350 Income from operations $1,292,660 $943,570 Other revenue 68,040 60,230 $1,360,700 $1,003,800 Other expense (interest) 328,000 180,800 Income before income tax $1,032,700 $823,000 Income tax expense 123,900 98,800 Net income $908,800 $724,200 Marshall Inc. Comparative Balance Sheet December 31, 20Y2 and 20Y1 20Y2 20Y1 Assets Current assets Cash $1,013,530 $917,700 Marketable securities 1,533,990 1,520,760 Accounts receivable (net) 978,200 919,800 Inventories 730,000 569,400 Prepaid expenses 191,756 183,540 Total current assets $4,447,476 $4,111,200 Long-term investments 2,479,894 1,119,115 Property, plant, and equipment (net) 5,330,000 4,797,000 Total assets $12,257,370 $10,027,315 Liabilities Current liabilities $1,347,720 $1,776,965 Long-term liabilities: Mortgage note payable, 8% $1,840,000 $0 Bonds payable, 8% 2,260,000 2,260,000 Total long-term liabilities $4,100,000 $2,260,000 Total liabilities $5,447,720 $4,036,965 Stockholders' Equity Preferred $0.70 stock, $50 par $850,000 $850,000 Common stock, $10 par 970,000 970,000 Retained earnings 4,989,650 4,170,350 Total stockholders' equity $6,809,650 $5,990,350 Total liabilities and stockholders' equity $12,257,370 $10,027,315 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

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 $ 67 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	$4,170,350		$3,535,650
Net income	908,800		724,200
Total	$5,079,150		$4,259,850
Dividends:
	On preferred stock	$11,900		$11,900
	On common stock	77,600		77,600
		Total dividends	$89,500		$89,500
Retained earnings, December 31	$4,989,650		$4,170,350

Marshall Inc.
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
	20Y2	20Y1
Sales	$5,124,600		$4,721,550
Cost of goods sold	1,819,160		1,673,630
Gross profit	$3,305,440		$3,047,920
Selling expenses	$1,086,900		$1,325,740
Administrative expenses	925,880		778,610
Total operating expenses	$2,012,780		$2,104,350
Income from operations	$1,292,660		$943,570
Other revenue	68,040		60,230
	$1,360,700		$1,003,800
Other expense (interest)	328,000		180,800
Income before income tax	$1,032,700		$823,000
Income tax expense	123,900		98,800
Net income	$908,800		$724,200

Marshall Inc.
Comparative Balance Sheet
December 31, 20Y2 and 20Y1
	20Y2	20Y1
Assets
Current assets
	Cash	$1,013,530		$917,700
	Marketable securities	1,533,990		1,520,760
	Accounts receivable (net)	978,200		919,800
	Inventories	730,000		569,400
	Prepaid expenses	191,756		183,540
		Total current assets	$4,447,476		$4,111,200
Long-term investments	2,479,894		1,119,115
Property, plant, and equipment (net)	5,330,000		4,797,000
Total assets	$12,257,370		$10,027,315
Liabilities
Current liabilities	$1,347,720		$1,776,965
Long-term liabilities:
	Mortgage note payable, 8%	$1,840,000		$0
	Bonds payable, 8%	2,260,000		2,260,000
		Total long-term liabilities	$4,100,000		$2,260,000
Total liabilities	$5,447,720		$4,036,965
Stockholders' Equity
Preferred $0.70 stock, $50 par	$850,000		$850,000
Common stock, $10 par	970,000		970,000
Retained earnings	4,989,650		4,170,350
Total stockholders' equity	$6,809,650		$5,990,350
Total liabilities and stockholders' equity	$12,257,370		$10,027,315

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	fill in the blank 18	%

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