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 $4,135,050 $3,490,250 Net income 960,000 714,900 Total $5,095,050 $4,205,150 Dividends: On preferred stock $11,900 $11,900 On common stock 58,200 58,200 Total dividends $70,100 $70,100 Retained earnings, December 31 $5,024,950 $4,135,050 Marshall Inc. Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Y1 Sales $5,259,650 $4,846,000 Cost of goods sold 1,905,300 1,752,880 Gross profit $3,354,350 $3,093,120 Selling expenses $1,079,350 $1,358,360 Administrative expenses 919,450 797,770 Total operating expenses $1,998,800 $2,156,130 Income from operations $1,355,550 $936,990 Other revenue 71,350 59,810 $1,426,900 $996,800 Other expense (interest) 336,000 184,800 Income before income tax $1,090,900 $812,000 Income tax expense 130,900 97,100 Net income $960,000 $714,900 Marshall Inc. Comparative Balance Sheet December 31, 20Y2 and 20Y1 20Y2 20Y1 Assets Current assets Cash $870,600 $999,790 Marketable securities 1,317,660 1,656,780 Accounts receivable (net) 985,500 927,100 Inventories 744,600 569,400 Prepaid expenses 164,712 199,960 Total current assets $4,083,072 $4,353,030 Long-term investments 3,617,838 2,106,113 Property, plant, and equipment (net) 4,620,000 4,158,000 Total assets $12,320,910 $10,617,143 Liabilities Current liabilities $1,275,960 $2,352,093 Long-term liabilities: Mortgage note payable, 8% $1,890,000 $0 Bonds payable, 8% 2,310,000 2,310,000 Total long-term liabilities $4,200,000 $2,310,000 Total liabilities $5,475,960 $4,662,093 Stockholders' Equity Preferred $0.70 stock, $50 par $850,000 $850,000 Common stock, $10 par 970,000 970,000 Retained earnings 5,024,950 4,135,050 Total stockholders' equity $6,844,950 $5,955,050 Total liabilities and stockholders' equity $12,320,910 $10,617,143 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. 7. Number of days' sales in inventory days 8. Ratio of fixed assets to long-term liabilities 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

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 $4,135,050 $3,490,250 Net income 960,000 714,900 Total $5,095,050 $4,205,150 Dividends: On preferred stock $11,900 $11,900 On common stock 58,200 58,200 Total dividends $70,100 $70,100 Retained earnings, December 31 $5,024,950 $4,135,050 Marshall Inc. Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Y1 Sales $5,259,650 $4,846,000 Cost of goods sold 1,905,300 1,752,880 Gross profit $3,354,350 $3,093,120 Selling expenses $1,079,350 $1,358,360 Administrative expenses 919,450 797,770 Total operating expenses $1,998,800 $2,156,130 Income from operations $1,355,550 $936,990 Other revenue 71,350 59,810 $1,426,900 $996,800 Other expense (interest) 336,000 184,800 Income before income tax $1,090,900 $812,000 Income tax expense 130,900 97,100 Net income $960,000 $714,900 Marshall Inc. Comparative Balance Sheet December 31, 20Y2 and 20Y1 20Y2 20Y1 Assets Current assets Cash $870,600 $999,790 Marketable securities 1,317,660 1,656,780 Accounts receivable (net) 985,500 927,100 Inventories 744,600 569,400 Prepaid expenses 164,712 199,960 Total current assets $4,083,072 $4,353,030 Long-term investments 3,617,838 2,106,113 Property, plant, and equipment (net) 4,620,000 4,158,000 Total assets $12,320,910 $10,617,143 Liabilities Current liabilities $1,275,960 $2,352,093 Long-term liabilities: Mortgage note payable, 8% $1,890,000 $0 Bonds payable, 8% 2,310,000 2,310,000 Total long-term liabilities $4,200,000 $2,310,000 Total liabilities $5,475,960 $4,662,093 Stockholders' Equity Preferred $0.70 stock, $50 par $850,000 $850,000 Common stock, $10 par 970,000 970,000 Retained earnings 5,024,950 4,135,050 Total stockholders' equity $6,844,950 $5,955,050 Total liabilities and stockholders' equity $12,320,910 $10,617,143 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. 7. Number of days' sales in inventory days 8. Ratio of fixed assets to long-term liabilities 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

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 $ 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	$4,135,050		$3,490,250
Net income	960,000		714,900
Total	$5,095,050		$4,205,150
Dividends:
	On preferred stock	$11,900		$11,900
	On common stock	58,200		58,200
		Total dividends	$70,100		$70,100
Retained earnings, December 31	$5,024,950		$4,135,050

Marshall Inc.
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
	20Y2	20Y1
Sales	$5,259,650		$4,846,000
Cost of goods sold	1,905,300		1,752,880
Gross profit	$3,354,350		$3,093,120
Selling expenses	$1,079,350		$1,358,360
Administrative expenses	919,450		797,770
Total operating expenses	$1,998,800		$2,156,130
Income from operations	$1,355,550		$936,990
Other revenue	71,350		59,810
	$1,426,900		$996,800
Other expense (interest)	336,000		184,800
Income before income tax	$1,090,900		$812,000
Income tax expense	130,900		97,100
Net income	$960,000		$714,900

Marshall Inc.
Comparative Balance Sheet
December 31, 20Y2 and 20Y1
	20Y2	20Y1
Assets
Current assets
	Cash	$870,600		$999,790
	Marketable securities	1,317,660		1,656,780
	Accounts receivable (net)	985,500		927,100
	Inventories	744,600		569,400
	Prepaid expenses	164,712		199,960
		Total current assets	$4,083,072		$4,353,030
Long-term investments	3,617,838		2,106,113
Property, plant, and equipment (net)	4,620,000		4,158,000
Total assets	$12,320,910		$10,617,143
Liabilities
Current liabilities	$1,275,960		$2,352,093
Long-term liabilities:
	Mortgage note payable, 8%	$1,890,000		$0
	Bonds payable, 8%	2,310,000		2,310,000
		Total long-term liabilities	$4,200,000		$2,310,000
Total liabilities	$5,475,960		$4,662,093
Stockholders' Equity
Preferred $0.70 stock, $50 par	$850,000		$850,000
Common stock, $10 par	970,000		970,000
Retained earnings	5,024,950		4,135,050
Total stockholders' equity	$6,844,950		$5,955,050
Total liabilities and stockholders' equity	$12,320,910		$10,617,143

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.

7. Number of days' sales in inventory		days
8. Ratio of fixed assets to long-term liabilities

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

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