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 StatementFor the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Y1Retained earnings, January 1$3,704,000 $3,264,000 Net income600,000 550,000 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 StatementFor the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Y1Sales$10,850,000 $10,000,000Cost of merchandise sold6,000,000 5,450,000Gross profit$4,850,000 $4,550,000Selling expenses$2,170,000 $2,000,000Administrative expenses1,627,500 1,500,000Total operating expenses$3,797,500 $3,500,000Income from operations$1,052,500 $1,050,000Other revenue and expense: Other revenue99,500 20,000 Other expense (interest)(132,000) (120,000)Income before income tax expense$1,020,000 $950,000Income tax expense420,000 400,000Net income$600,000 $550,000Marshall Inc.Comparative Balance SheetDecember 31, 20Y2 and 20Y1 20Y2 20Y1Assets Current assets: Cash$1,050,000 $ 950,000 Marketable securities301,000 420,000 Accounts receivable (net)585,000 500,000 Inventories420,000 380,000 Prepaid expenses108,000 20,000 Total current assets$2,464,000 $2,270,000Long-term investments800,000 800,000Property, plant, and equipment (net)5,760,000 5,184,000Total assets$9,024,000 $8,254,000Liabilities Current liabilities$880,000 $800,000Long-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 $3,000,000Total liabilities$4,080,000 $3,800,000Stockholders' Equity Preferred 4% stock, $5 par$250,000 $250,000Common stock, $5 par500,000 500,000Retained earnings4,194,000 3,704,000Total stockholders' equity$4,944,000 $4,454,000Total liabilities and stockholders' equity$9,024,000 $8,254,000Required:Determine the following measures for 20Y2, rounding to one decimal place, except dollar amounts which should be rounded to the nearest cent. Use the rounded answer of the requirement for subsequent requirement, if required. Assume 365 days a year.1. Working capital$fill in the blank 1 2. Current ratiofill in the blank 2 3. Quick ratiofill in the blank 3 4. Accounts receivable turnoverfill in the blank 4 5. Number of days' sales in receivablesfill in the blank 5days 6. Inventory turnoverfill in the blank 6 7. Number of days' sales in inventoryfill in the blank 7days 8. Ratio of fixed assets to long-term liabilitiesfill in the blank 8 9. Ratio of liabilities to stockholders' equityfill in the blank 9 10. Times interest earnedfill in the blank 10 11. Asset turnoverfill in the blank 11 12. Return on total assetsfill in the blank 12% 13. Return on stockholders’ equityfill in the blank 13% 14. Return on common stockholders’ equityfill in the blank 14% 15. Earnings per share on common stock$fill in the blank 15 16. Price-earnings ratiofill in the blank 16 17. Dividends per share of common stock$fill in the blank 17 18. Dividend yieldfill in the blank 18%

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Answered: The comparative financial statements of…

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 4PA: Measures of liquidity, solvency, and profitability The comparative financial statements of Marshall...

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Question

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

Required:

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.

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 5days
6. Inventory turnover	fill in the blank 6
7. Number of days' sales in inventory	fill in the blank 7days
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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