The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was $82.60 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 $3,704,000 $3,264,000 Net income 600,000 550,000 Dividends: On preferred stock (10,000) (10,000) On common stock (100,000) (100,000) Retained earnings, December 31 $4,194,000 $3,704,000 Marshall Inc. Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Y1 Sales $10,850,000 $10,000,000 Cost of merchandise sold 6,000,000 5,450,000 Gross profit $4,850,000 $4,550,000 Selling expenses $2,170,000 $2,000,000 Administrative expenses 1,627,500 1,500,000 Total operating expenses $3,797,500 $3,500,000 Income from operations $1,052,500 $1,050,000 Other revenue and expense: Other revenue 99,500 20,000 Other expense (interest) (132,000) (120,000) Income before income tax expense $1,020,000 $950,000 Income tax expense 420,000 400,000 Net income $600,000 $550,000 Marshall Inc. Comparative Balance Sheet December 31, 20Y2 and 20Y1 20Y2 20Y1 Assets Current assets: Cash $1,050,000 $ 950,000 Marketable securities 301,000 420,000 Accounts receivable (net) 585,000 500,000 Inventories 420,000 380,000 Prepaid expenses 108,000 20,000 Total current assets $2,464,000 $2,270,000 Long-term investments 800,000 800,000 Property, plant, and equipment (net) 5,760,000 5,184,000 Total assets $9,024,000 $8,254,000 Liabilities Current liabilities $880,000 $800,000 Long-term liabilities: Mortgage note payable, 6% $200,000 $0 Bonds payable, 4% 3,000,000 $3,000,000 Total long-term liabilities $3,200,000 $3,000,000 Total liabilities $4,080,000 $3,800,000 Stockholders' Equity Preferred 4% stock, $5 par $250,000 $250,000 Common stock, $5 par 500,000 500,000 Retained earnings 4,194,000 3,704,000 Total stockholders' equity $4,944,000 $4,454,000 Total liabilities and stockholders' equity $9,024,000 $8,254,000

The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was $82.60 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 $3,704,000 $3,264,000 Net income 600,000 550,000 Dividends: On preferred stock (10,000) (10,000) On common stock (100,000) (100,000) Retained earnings, December 31 $4,194,000 $3,704,000 Marshall Inc. Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Y1 Sales $10,850,000 $10,000,000 Cost of merchandise sold 6,000,000 5,450,000 Gross profit $4,850,000 $4,550,000 Selling expenses $2,170,000 $2,000,000 Administrative expenses 1,627,500 1,500,000 Total operating expenses $3,797,500 $3,500,000 Income from operations $1,052,500 $1,050,000 Other revenue and expense: Other revenue 99,500 20,000 Other expense (interest) (132,000) (120,000) Income before income tax expense $1,020,000 $950,000 Income tax expense 420,000 400,000 Net income $600,000 $550,000 Marshall Inc. Comparative Balance Sheet December 31, 20Y2 and 20Y1 20Y2 20Y1 Assets Current assets: Cash $1,050,000 $ 950,000 Marketable securities 301,000 420,000 Accounts receivable (net) 585,000 500,000 Inventories 420,000 380,000 Prepaid expenses 108,000 20,000 Total current assets $2,464,000 $2,270,000 Long-term investments 800,000 800,000 Property, plant, and equipment (net) 5,760,000 5,184,000 Total assets $9,024,000 $8,254,000 Liabilities Current liabilities $880,000 $800,000 Long-term liabilities: Mortgage note payable, 6% $200,000 $0 Bonds payable, 4% 3,000,000 $3,000,000 Total long-term liabilities $3,200,000 $3,000,000 Total liabilities $4,080,000 $3,800,000 Stockholders' Equity Preferred 4% stock, $5 par $250,000 $250,000 Common stock, $5 par 500,000 500,000 Retained earnings 4,194,000 3,704,000 Total stockholders' equity $4,944,000 $4,454,000 Total liabilities and stockholders' equity $9,024,000 $8,254,000

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter16: Financial Statement Analysis

Section: Chapter Questions

Problem 4PB

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The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was $82.60 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	$3,704,000	$3,264,000
Net income	600,000	550,000
Dividends:
On preferred stock	(10,000)	(10,000)
On common stock	(100,000)	(100,000)
Retained earnings, December 31	$4,194,000	$3,704,000

Marshall Inc. Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1
	20Y2	20Y1
Sales	$10,850,000	$10,000,000
Cost of merchandise sold	6,000,000	5,450,000
Gross profit	$4,850,000	$4,550,000
Selling expenses	$2,170,000	$2,000,000
Administrative expenses	1,627,500	1,500,000
Total operating expenses	$3,797,500	$3,500,000
Income from operations	$1,052,500	$1,050,000
Other revenue and expense:
Other revenue	99,500	20,000
Other expense (interest)	(132,000)	(120,000)
Income before income tax expense	$1,020,000	$950,000
Income tax expense	420,000	400,000
Net income	$600,000	$550,000

Marshall Inc. Comparative Balance Sheet December 31, 20Y2 and 20Y1
	20Y2	20Y1
Assets
Current assets:
Cash	$1,050,000	$ 950,000
Marketable securities	301,000	420,000
Accounts receivable (net)	585,000	500,000
Inventories	420,000	380,000
Prepaid expenses	108,000	20,000
Total current assets	$2,464,000	$2,270,000
Long-term investments	800,000	800,000
Property, plant, and equipment (net)	5,760,000	5,184,000
Total assets	$9,024,000	$8,254,000
Liabilities
Current liabilities	$880,000	$800,000
Long-term liabilities:
Mortgage note payable, 6%	$200,000	$0
Bonds payable, 4%	3,000,000	$3,000,000
Total long-term liabilities	$3,200,000	$3,000,000
Total liabilities	$4,080,000	$3,800,000
Stockholders' Equity
Preferred 4% stock, $5 par	$250,000	$250,000
Common stock, $5 par	500,000	500,000
Retained earnings	4,194,000	3,704,000
Total stockholders' equity	$4,944,000	$4,454,000
Total liabilities and stockholders' equity	$9,024,000	$8,254,000

Determine the following measures for 20Y2, rounding to one decimal place, except 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.
Working capital
Current ratio
Quick ratio
Accounts receivable turnover
Number of days' sales in receivables
days
Inventory turnover
Number of days' sales in inventory
days
Ratio of fixed assets to long-term liabilities
Ratio of liabilities to stockholders' equity
Times interest earned
Asset turnover
Return on total assets
%
Return on stockholders' equity
%
Return on common stockholders' equity
Earnings per share on common stock
Price-earnings ratio
Dividends per share of common stock
Dividend yield

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