Measures of liquidity, Solvency and ProfitabilityThe comparative financial statements of Marshall Inc. are as follows. The market price of Marshall Inc. common stock was $ 60 on December 31, 20Y2.Marshall Inc.Comparative Retained Earnings StatementFor the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Y1Retained earnings, January 1$ 1,024,550 $ 869,250 Net income233,600 178,000 Total$ 1,258,150 $ 1,047,250 Dividends On preferred stock$ 7,700 $ 7,700 On common stock15,000 15,000 Total dividends$ 22,700 $ 22,700 Retained earnings, December 31$ 1,235,450 $ 1,024,550 Marshall Inc.Comparative Income StatementFor the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Y1Sales$ 1,456,350 $ 1,341,770 Cost of goods sold520,490 478,850 Gross profit$ 935,860 $ 862,920 Selling expenses$ 319,920 $ 392,750 Administrative expenses272,520 230,660 Total operating expenses592,440 623,410 Income from operations$ 343,420 $ 239,510 Other income18,080 15,290 $ 361,500 $ 254,800 Other expense (interest)96,000 52,800 Income before income tax$ 265,500 $ 202,000 Income tax expense31,900 24,000 Net income$ 233,600 $ 178,000 Marshall Inc.Comparative Balance SheetDecember 31, 20Y2 and 20Y1 Dec. 31, 20Y2 Dec. 31, 20Y1Assets Current assets Cash$ 229,070 $ 241,640 Marketable securities346,690 400,430 Accounts receivable (net)262,800 248,200 Inventories189,800 146,000 Prepaid expenses43,336 48,330 Total current assets$ 1,071,696 $ 1,084,600 Long-term investments608,659 156,759 Property, plant, and equipment (net)1,560,000 1,404,000 Total assets$ 3,240,355 $ 2,645,359 LiabilitiesCurrent liabilities$ 334,905 $ 490,809 Long-term liabilities Mortgage note payable, 8 %$ 540,000 $ 0 Bonds payable, 8 %660,000 660,000 Total long-term liabilities$ 1,200,000 $ 660,000 Total liabilities$ 1,534,905 $ 1,150,809 Stockholders' Equity Preferred $ 0.70 stock, $ 20 par$ 220,000 $ 220,000 Common stock, $ 10 par250,000 250,000 Retained earnings1,235,450 1,024,550 Total stockholders' equity$ 1,705,450 $ 1,494,550 Total liabilities and stockholders' equity$ 3,240,355 $ 2,645,359 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$ 2. Current ratio 3. Quick ratio 4. Accounts receivable turnover 5. Number of days' sales in receivables days6. Inventory turnover 7. Number of days' sales in inventory days8. Ratio of fixed assets to long-term liabilities 9. Ratio of liabilities to stockholders' equity 10. Times interest earned 11. Asset turnover 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 %Check My Work

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Description: Measures of liquidity, Solvency and ProfitabilityThe comparative financial statements of Marshall Inc. are as follows. The market price of Marshall Inc. common stock was $ 60 on December 31, 20Y2.Marshall Inc.Comparative Retained Earnings StatementFo

Working capital is the surplus of a company's current assets over its current liabilities. It…

Measures of liquidity, Solvency and Profitability The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall Inc. common stock was $ 60 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 $ 1,024,550 $ 869,250 Net income 233,600 178,000 Total $ 1,258,150 $ 1,047,250 Dividends On preferred stock $ 7,700 $ 7,700 On common stock 15,000 15,000 Total dividends $ 22,700 $ 22,700 Retained earnings, December 31 $ 1,235,450 $ 1,024,550 Marshall Inc. Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Y1 Sales $ 1,456,350 $ 1,341,770 Cost of goods sold 520,490 478,850 Gross profit $ 935,860 $ 862,920 Selling expenses $ 319,920 $ 392,750 Administrative expenses 272,520 230,660 Total operating expenses 592,440 623,410 Income from operations $ 343,420 $ 239,510 Other income 18,080 15,290 $ 361,500 $ 254,800 Other expense (interest) 96,000 52,800 Income before income tax $ 265,500 $ 202,000 Income tax expense 31,900 24,000 Net income $ 233,600 $ 178,000 Marshall Inc. Comparative Balance Sheet December 31, 20Y2 and

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Chapter17: Financial Statement Analysis

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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 Inc. common stock was $ 60 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	$ 1,024,550		$ 869,250
Net income	233,600		178,000
Total	$ 1,258,150		$ 1,047,250
Dividends
	On preferred stock	$ 7,700		$ 7,700
	On common stock	15,000		15,000
		Total dividends	$ 22,700		$ 22,700
Retained earnings, December 31	$ 1,235,450		$ 1,024,550

Marshall Inc.
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
	20Y2	20Y1
Sales	$ 1,456,350		$ 1,341,770
Cost of goods sold	520,490		478,850
Gross profit	$ 935,860		$ 862,920
Selling expenses	$ 319,920		$ 392,750
Administrative expenses	272,520		230,660
Total operating expenses	592,440		623,410
Income from operations	$ 343,420		$ 239,510
Other income	18,080		15,290
	$ 361,500		$ 254,800
Other expense (interest)	96,000		52,800
Income before income tax	$ 265,500		$ 202,000
Income tax expense	31,900		24,000
Net income	$ 233,600		$ 178,000

Marshall Inc.
Comparative Balance Sheet
December 31, 20Y2 and 20Y1
	Dec. 31, 20Y2	Dec. 31, 20Y1
Assets
Current assets
	Cash	$ 229,070		$ 241,640
	Marketable securities	346,690		400,430
	Accounts receivable (net)	262,800		248,200
	Inventories	189,800		146,000
	Prepaid expenses	43,336		48,330
		Total current assets	$ 1,071,696		$ 1,084,600
Long-term investments	608,659		156,759
Property, plant, and equipment (net)	1,560,000		1,404,000
Total assets	$ 3,240,355		$ 2,645,359
Liabilities
Current liabilities	$ 334,905		$ 490,809
Long-term liabilities
	Mortgage note payable, 8 %	$ 540,000		$ 0
	Bonds payable, 8 %	660,000		660,000
		Total long-term liabilities	$ 1,200,000		$ 660,000
Total liabilities	$ 1,534,905		$ 1,150,809
Stockholders' Equity
Preferred $ 0.70 stock, $ 20 par	$ 220,000		$ 220,000
Common stock, $ 10 par	250,000		250,000
Retained earnings	1,235,450		1,024,550
	Total stockholders' equity	$ 1,705,450		$ 1,494,550
Total liabilities and stockholders' equity	$ 3,240,355		$ 2,645,359

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	$
2. Current ratio
3. Quick ratio
4. Accounts receivable turnover
5. Number of days' sales in receivables		days
6. Inventory turnover
7. Number of days' sales in inventory		days
8. Ratio of fixed assets to long-term liabilities
9. Ratio of liabilities to stockholders' equity
10. Times interest earned
11. Asset turnover
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		%

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