Measures of liquidity, Solvency, and ProfitabilityThe comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was $ 61 on December 31, 20Y2.Marshall Inc.Comparative Retained Earnings StatementFor the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Y1Retained earnings, January 1$3,350,500 $2,822,200 Net income748,800 578,100 Dividends: On preferred stock(9,800) (9,800) On common stock(40,000) (40,000) Retained earnings, December 31$4,049,500 $3,350,500 Marshall Inc.Comparative Income StatementFor the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Y1Sales$4,270,500 $3,934,620 Cost of merchandise sold1,608,920 1,480,210 Gross profit$2,661,580 $2,454,410 Selling expenses$844,790 $1,058,190 Administrative expenses719,640 621,470 Total operating expenses$1,564,430 $1,679,660 Income from operations$1,097,150 $774,750 Other revenue and expense: Other revenue57,750 49,450 Other expense (interest)(304,000) (167,200) Income before income tax expense$850,900 $657,000 Income tax expense102,100 78,900 Net income$748,800 $578,100 Marshall Inc.Comparative Balance SheetDecember 31, 20Y2 and 20Y1 20Y2 20Y1Assets Current assets: Cash$736,150 $761,910 Marketable securities1,114,170 1,262,590 Accounts receivable (net)846,800 795,700 Inventories627,800 481,800 Prepaid expenses139,275 152,380 Total current assets$3,464,195 $3,454,380 Long-term investments2,139,855 524,939 Property, plant, and equipment (net)4,940,000 4,446,000 Total assets$10,544,050 $8,425,319 LiabilitiesCurrent liabilities$1,194,550 $1,484,819 Long-term liabilities: Mortgage note payable, 8%$1,710,000 $0 Bonds payable, 8%2,090,000 2,090,000 Total long-term liabilities$3,800,000 $2,090,000 Total liabilities$4,994,550 $3,574,819 Stockholders' Equity Preferred $0.70 stock, $50 par$700,000 $700,000 Common stock, $10 par800,000 800,000 Retained earnings4,049,500 3,350,500 Total stockholders' equity$5,549,500 $4,850,500 Total liabilities and stockholders' equity$10,544,050 $8,425,319 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. 10. Times interest earned11. Asset turnover12.Return on total assets%13. Return on stockholders' equity%14.Return on common stockholders' equity16.4%15. Earnings per share on common stock16. Price-earnings ratio

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Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter14: Financial Statement Analysis

Section: Chapter Questions

Problem 10BE: A company reports the following: Determine (a) the return on stockholders equity and (b) the return...

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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 $ 61 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	$3,350,500		$2,822,200
Net income	748,800		578,100
Dividends:
	On preferred stock	(9,800)		(9,800)
	On common stock	(40,000)		(40,000)
Retained earnings, December 31	$4,049,500		$3,350,500

Marshall Inc.
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
	20Y2	20Y1
Sales	$4,270,500		$3,934,620
Cost of merchandise sold	1,608,920		1,480,210
Gross profit	$2,661,580		$2,454,410
Selling expenses	$844,790		$1,058,190
Administrative expenses	719,640		621,470
Total operating expenses	$1,564,430		$1,679,660
Income from operations	$1,097,150		$774,750
Other revenue and expense:
Other revenue	57,750		49,450
Other expense (interest)	(304,000)		(167,200)
Income before income tax expense	$850,900		$657,000
Income tax expense	102,100		78,900
Net income	$748,800		$578,100

Marshall Inc.
Comparative Balance Sheet
December 31, 20Y2 and 20Y1
	20Y2	20Y1
Assets
Current assets:
	Cash	$736,150		$761,910
	Marketable securities	1,114,170		1,262,590
	Accounts receivable (net)	846,800		795,700
	Inventories	627,800		481,800
	Prepaid expenses	139,275		152,380
		Total current assets	$3,464,195		$3,454,380
Long-term investments	2,139,855		524,939
Property, plant, and equipment (net)	4,940,000		4,446,000
Total assets	$10,544,050		$8,425,319
Liabilities
Current liabilities	$1,194,550		$1,484,819
Long-term liabilities:
	Mortgage note payable, 8%	$1,710,000		$0
	Bonds payable, 8%	2,090,000		2,090,000
		Total long-term liabilities	$3,800,000		$2,090,000
Total liabilities	$4,994,550		$3,574,819
Stockholders' Equity
Preferred $0.70 stock, $50 par	$700,000		$700,000
Common stock, $10 par	800,000		800,000
Retained earnings	4,049,500		3,350,500
Total stockholders' equity	$5,549,500		$4,850,500
Total liabilities and stockholders' equity	$10,544,050		$8,425,319

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.

10. Times interest earned
11. Asset turnover
12.
Return on total assets
%
13. Return on stockholders' equity
%
14.
Return on common stockholders' equity
16.4
%
15. Earnings per share on common stock
16. Price-earnings ratio

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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 $ 61 on December 31, 20Y2. Marshall Inc. Comparative Retained Earnings Statement For the Years Ended De