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 20Y120Y220Y1Retained earnings, January 1.........................................$3,704,000$3,264,000Net income ......................................................... 600,000 550,000Total ...............................................................$4,304,000$3,814,000Dividends:On preferred stock ...............................................$ 10,000$ 10,000On common stock................................................100,000 100,000Total dividends ...............................................$ 110,000$ 110,000Retained earnings, December 31 .....................................$4,194,000$3,704,000Marshall Inc.Comparative Income StatementFor the Years Ended December 31, 20Y2 and 20Y120Y220Y1Sales ...............................................................$10,850,000$10,000,000Cost of goods sold...................................................6,000,0005,450,000Gross profit .........................................................$ 4,850,000$ 4,550,000Selling expenses ....................................................$ 2,170,000$ 2,000,000Administrative expenses............................................. 1,627,500 1,500,000Total operating expenses ............................................$ 3,797,500$ 3,500,000Income from operations .............................................$ 1,052,500$ 1,050,000Other revenue ......................................................99,500 20,000$1,152,000$ 1,070,000Other expense (interest) ............................................. 132,000 120,000Income before income tax ...........................................$1,020,000$ 950,000Income tax expense ................................................. 420,000 400,000Net income .........................................................$600,000$ 550,000Marshall Inc.Comparative Balance SheetDecember 31, 20Y2 and 20Y120Y220Y1AssetsCurrent assets:Cash ..........................................................$1,050,000$ 950,000Marketable securities........................................... 301,000 420,000Accounts receivable (net)....................................... 585,000 500,000Inventories ....................................................420,000 380,000Prepaid expenses ..............................................108,000 20,000Total current assets..........................................$ 2,464,000$2,270,000Long-term investments............................................800,000800,000Property, plant, and equipment (net) ...............................5,760,0005,184,000Total assets .......................................................$ 9,024,000$8,254,000LiabilitiesCurrent liabilities..................................................$ 880,000$ 800,000Long-term liabilities:Mortgage note payable, 6% ....................................$200,000$ 0Bonds payable, 4% ............................................. 3,000,0003,000,000Total long-term liabilities ....................................$ 3,200,000$3,000,000Total liabilities ....................................................$ 4,080,000$3,800,000Stockholders’ EquityPreferred 4% stock, $5 par .........................................$250,000$ 250,000Common stock, $5 par.............................................500,000500,000Retained earnings.................................................4,194,0003,704,000Total stockholders’ equity..........................................$ 4,944,000$4,454,000Total liabilities and stockholders’ equity.............................$ 9,024,000$8,254,000 5. Number of days’ sales in receivables, 18.3Excel InstructionsDetermine the following measures for 20Y2, rounding to one decimal place, including per-centages, except for per-share amounts:1.Working capital2.Current ratio3.Quick ratio4.Accounts receivable turnover5.Number of days’ sales in receivables6.Inventory turnover7.Number of days’ sales in inventory8.Ratio of fixed assets to long-term liabilities9.Ratio of liabilities to stockholders’ equity10.Times interest earned11.Asset turnover12.Return on total assets13.Return on stockholders’ equity14.Return on common stockholders’ equity15.Earnings per share on common stock16.Price-earnings ratio17.Dividends per share of common stock18.Dividend yield

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 20Y120Y220Y1Retained earnings, January 1.........................................$3,704,000$3,264,000Net income ......................................................... 600,000 550,000Total ...............................................................$4,304,000$3,814,000Dividends:On preferred stock ...............................................$ 10,000$ 10,000On common stock................................................100,000 100,000Total dividends ...............................................$ 110,000$ 110,000Retained earnings, December 31 .....................................$4,194,000$3,704,000Marshall Inc.Comparative Income StatementFor the Years Ended December 31, 20Y2 and 20Y120Y220Y1Sales ...............................................................$10,850,000$10,000,000Cost of goods sold...................................................6,000,0005,450,000Gross profit .........................................................$ 4,850,000$ 4,550,000Selling expenses ....................................................$ 2,170,000$ 2,000,000Administrative expenses............................................. 1,627,500 1,500,000Total operating expenses ............................................$ 3,797,500$ 3,500,000Income from operations .............................................$ 1,052,500$ 1,050,000Other revenue ......................................................99,500 20,000$1,152,000$ 1,070,000Other expense (interest) ............................................. 132,000 120,000Income before income tax ...........................................$1,020,000$ 950,000Income tax expense ................................................. 420,000 400,000Net income .........................................................$600,000$ 550,000Marshall Inc.Comparative Balance SheetDecember 31, 20Y2 and 20Y120Y220Y1AssetsCurrent assets:Cash ..........................................................$1,050,000$ 950,000Marketable securities........................................... 301,000 420,000Accounts receivable (net)....................................... 585,000 500,000Inventories ....................................................420,000 380,000Prepaid expenses ..............................................108,000 20,000Total current assets..........................................$ 2,464,000$2,270,000Long-term investments............................................800,000800,000Property, plant, and equipment (net) ...............................5,760,0005,184,000Total assets .......................................................$ 9,024,000$8,254,000LiabilitiesCurrent liabilities..................................................$ 880,000$ 800,000Long-term liabilities:Mortgage note payable, 6% ....................................$200,000$ 0Bonds payable, 4% ............................................. 3,000,0003,000,000Total long-term liabilities ....................................$ 3,200,000$3,000,000Total liabilities ....................................................$ 4,080,000$3,800,000Stockholders’ EquityPreferred 4% stock, $5 par .........................................$250,000$ 250,000Common stock, $5 par.............................................500,000500,000Retained earnings.................................................4,194,0003,704,000Total stockholders’ equity..........................................$ 4,944,000$4,454,000Total liabilities and stockholders’ equity.............................$ 9,024,000$8,254,000 5. Number of days’ sales in receivables, 18.3Excel InstructionsDetermine the following measures for 20Y2, rounding to one decimal place, including per-centages, except for per-share amounts:1.Working capital2.Current ratio3.Quick ratio4.Accounts receivable turnover5.Number of days’ sales in receivables6.Inventory turnover7.Number of days’ sales in inventory8.Ratio of fixed assets to long-term liabilities9.Ratio of liabilities to stockholders’ equity10.Times interest earned11.Asset turnover12.Return on total assets13.Return on stockholders’ equity14.Return on common stockholders’ equity15.Earnings per share on common stock16.Price-earnings ratio17.Dividends per share of common stock18.Dividend yield

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 21E

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