Measures of liquidity, Solvency and ProfitabilityThe comparative financial statements of Marshall Inc. are asfollows....Measures...

70.2K

Verified Solution

Question

Accounting

Measures of liquidity, Solvency and Profitability
The comparative financial statements of Marshall Inc. are asfollows. The market price of Marshall Inc. common stock was $ 65 onDecember 31, 20Y2.
Marshall Inc.
Comparative Retained EarningsStatement
For the Years Ended December 31, 20Y2 and20Y1
   20Y2    20Y1
Retained earnings, January 1 $ 1,163,475 $ 982,725
Net income 273,600 201,300
Total $ 1,395,975 $ 1,184,025
Dividends
On preferred stock $ 8,400 $ 8,400
On common stock 12,150 12,150
Total dividends $ 20,550 $ 20,550
Retained earnings, December 31 $ 1,416,525 $ 1,163,475

Marshall Inc.
Comparative Income Statement
For the Years Ended December 31, 20Y2 and20Y1
   20Y2    20Y1
Sales $ 1,644,325 $ 1,514,960
Cost of goods sold 635,100 584,290
Gross profit $ 1,009,225 $ 930,670
Selling expenses $ 319,830 $ 409,010
Administrative expenses 272,445 240,220
Total operating expenses 592,275 649,230
Income from operations $ 416,950 $ 281,440
Other income 21,950 17,960
$ 438,900 $ 299,400
Other expense (interest) 128,000 70,400
Income before income tax $ 310,900 $ 229,000
Income tax expense 37,300 27,700
Net income $ 273,600 $ 201,300

Marshall Inc.
Comparative Balance Sheet
December 31, 20Y2 and 20Y1
   Dec. 31,20Y2    Dec. 31,20Y1
Assets
Current assets
Cash $ 346,400 $ 259,300
Marketable securities 524,280 429,700
Accounts receivable (net) 321,200 299,300
Inventories 248,200 189,800
Prepaid expenses 65,536 51,860
Total current assets $ 1,505,616 $ 1,229,960
Long-term investments 620,087 41,951
Property, plant, and equipment (net) 1,920,000 1,728,000
Total assets $ 4,045,703 $ 2,999,911
Liabilities
Current liabilities $ 519,178 $ 446,436
Long-term liabilities
Mortgage note payable, 8 % $ 720,000 $ 0
Bonds payable, 8 % 880,000 880,000
Total long-term liabilities $ 1,600,000 $ 880,000
Total liabilities $ 2,119,178 $ 1,326,436
Stockholders' Equity
Preferred $ 0.70 stock, $ 20 par $ 240,000 $ 240,000
Common stock, $ 10 par 270,000 270,000
Retained earnings 1,416,525 1,163,475
Total stockholders' equity $ 1,926,525 $ 1,673,475
Total liabilities and stockholders' equity $ 4,045,703 $ 2,999,911
Required:
Determine the following measures for 20Y2, rounding to onedecimal place, except for dollar amounts, which should be roundedto the nearest cent. Use the rounded answer of the requirement forsubsequent 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-termliabilities
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 %

Answer & Explanation Solved by verified expert

3.8 Ratings (602 Votes)

1 Working Capital Current Assets Current Liabilities Current Assets 1505616 Current Liabilities 519178 Working Capital 986438 2 Current Ratio Current assets Current Liabilities 1505616519178 2901 3 Quick Ratio Liquid AssetsCurrent Liabilities LiquidQuick Assets Cash 346400 Marketable Securities 524280 Accounts Receivables 321200 TOTAL 1191880 1191880519178 231 4 Account Receivables Turnover ratio Net Credit Sales See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

In: AccountingMeasures of liquidity, Solvency and ProfitabilityThe comparative financial statements of Marshall Inc. are asfollows....Measures of liquidity, Solvency and ProfitabilityThe comparative financial statements of Marshall Inc. are asfollows. The market price of Marshall Inc. common stock was $ 65 onDecember 31, 20Y2.Marshall Inc.Comparative Retained EarningsStatementFor the Years Ended December 31, 20Y2 and20Y1 20Y2 20Y1Retained earnings, January 1$ 1,163,475$ 982,725Net income273,600201,300Total$ 1,395,975$ 1,184,025DividendsOn preferred stock$ 8,400$ 8,400On common stock12,15012,150Total dividends$ 20,550$ 20,550Retained earnings, December 31$ 1,416,525$ 1,163,475Marshall Inc.Comparative Income StatementFor the Years Ended December 31, 20Y2 and20Y1 20Y2 20Y1Sales$ 1,644,325$ 1,514,960Cost of goods sold635,100584,290Gross profit$ 1,009,225$ 930,670Selling expenses$ 319,830$ 409,010Administrative expenses272,445240,220Total operating expenses592,275649,230Income from operations$ 416,950$ 281,440Other income21,95017,960$ 438,900$ 299,400Other expense (interest)128,00070,400Income before income tax$ 310,900$ 229,000Income tax expense37,30027,700Net income$ 273,600$ 201,300Marshall Inc.Comparative Balance SheetDecember 31, 20Y2 and 20Y1 Dec. 31,20Y2 Dec. 31,20Y1AssetsCurrent assetsCash$ 346,400$ 259,300Marketable securities524,280429,700Accounts receivable (net)321,200299,300Inventories248,200189,800Prepaid expenses65,53651,860Total current assets$ 1,505,616$ 1,229,960Long-term investments620,08741,951Property, plant, and equipment (net)1,920,0001,728,000Total assets$ 4,045,703$ 2,999,911LiabilitiesCurrent liabilities$ 519,178$ 446,436Long-term liabilitiesMortgage note payable, 8 %$ 720,000$ 0Bonds payable, 8 %880,000880,000Total long-term liabilities$ 1,600,000$ 880,000Total liabilities$ 2,119,178$ 1,326,436Stockholders' EquityPreferred $ 0.70 stock, $ 20 par$ 240,000$ 240,000Common stock, $ 10 par270,000270,000Retained earnings1,416,5251,163,475Total stockholders' equity$ 1,926,525$ 1,673,475Total liabilities and stockholders' equity$ 4,045,703$ 2,999,911Required:Determine the following measures for 20Y2, rounding to onedecimal place, except for dollar amounts, which should be roundedto the nearest cent. Use the rounded answer of the requirement forsubsequent requirement, if required. Assume 365 days a year.1. Working capital$2. Current ratio3. Quick ratio4. Accounts receivable turnover5. Number of days' sales in receivablesdays6. Inventory turnover7. Number of days' sales in inventorydays8. Ratio of fixed assets to long-termliabilities9. Ratio of liabilities to stockholders'equity10. Times interest earned11. Asset turnover12. 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 ratio17. Dividends per share of common stock$18. Dividend yield%

Marshall Inc.
Comparative Retained EarningsStatement
For the Years Ended December 31, 20Y2 and20Y1
			20Y2	20Y1
Retained earnings, January 1			$ 1,163,475	$ 982,725
Net income			273,600	201,300
Total			$ 1,395,975	$ 1,184,025
Dividends
	On preferred stock		$ 8,400	$ 8,400
	On common stock		12,150	12,150
		Total dividends	$ 20,550	$ 20,550
Retained earnings, December 31			$ 1,416,525	$ 1,163,475

Marshall Inc.
Comparative Income Statement
For the Years Ended December 31, 20Y2 and20Y1
	20Y2	20Y1
Sales	$ 1,644,325	$ 1,514,960
Cost of goods sold	635,100	584,290
Gross profit	$ 1,009,225	$ 930,670
Selling expenses	$ 319,830	$ 409,010
Administrative expenses	272,445	240,220
Total operating expenses	592,275	649,230
Income from operations	$ 416,950	$ 281,440
Other income	21,950	17,960
	$ 438,900	$ 299,400
Other expense (interest)	128,000	70,400
Income before income tax	$ 310,900	$ 229,000
Income tax expense	37,300	27,700
Net income	$ 273,600	$ 201,300

Marshall Inc.
Comparative Balance Sheet
December 31, 20Y2 and 20Y1
			Dec. 31,20Y2	Dec. 31,20Y1
Assets
Current assets
	Cash		$ 346,400	$ 259,300
	Marketable securities		524,280	429,700
	Accounts receivable (net)		321,200	299,300
	Inventories		248,200	189,800
	Prepaid expenses		65,536	51,860
		Total current assets	$ 1,505,616	$ 1,229,960
Long-term investments			620,087	41,951
Property, plant, and equipment (net)			1,920,000	1,728,000
Total assets			$ 4,045,703	$ 2,999,911
Liabilities
Current liabilities			$ 519,178	$ 446,436
Long-term liabilities
	Mortgage note payable, 8 %		$ 720,000	$ 0
	Bonds payable, 8 %		880,000	880,000
		Total long-term liabilities	$ 1,600,000	$ 880,000
Total liabilities			$ 2,119,178	$ 1,326,436
Stockholders' Equity
Preferred $ 0.70 stock, $ 20 par			$ 240,000	$ 240,000
Common stock, $ 10 par			270,000	270,000
Retained earnings			1,416,525	1,163,475
	Total stockholders' equity		$ 1,926,525	$ 1,673,475
Total liabilities and stockholders' equity			$ 4,045,703	$ 2,999,911

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-termliabilities
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		%