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

60.1K

Verified Solution

Question

Accounting

Measures of liquidity, Solvency, and Profitability
The comparative financial statements of Marshall Inc. are asfollows. The market price of Marshall common stock was $ 66 onDecember 31, 20Y2.
Marshall Inc.
Comparative Retained EarningsStatement
For the Years Ended December 31, 20Y2 and20Y1
   20Y2    20Y1
Retained earnings, January 1 $2,469,400 $2,083,800
Net income 562,400 426,800
Total $3,031,800 $2,510,600
Dividends:
On preferred stock $7,000 $7,000
On common stock 34,200 34,200
Total dividends $41,200 $41,200
Retained earnings, December 31 $2,990,600 $2,469,400

Marshall Inc.
Comparative Income Statement
For the Years Ended December 31, 20Y2 and20Y1
   20Y2    20Y1
Sales $3,372,600 $3,107,340
Cost of goods sold 1,165,080 1,071,870
Gross profit $2,207,520 $2,035,470
Selling expenses $749,290 $922,170
Administrative expenses 638,290 541,590
Total operating expenses $1,387,580 $1,463,760
Income from operations $819,940 $571,710
Other revenue 43,160 36,490
$863,100 $608,200
Other expense (interest) 224,000 123,200
Income before income tax $639,100 $485,000
Income tax expense 76,700 58,200
Net income $562,400 $426,800

Marshall Inc.
Comparative Balance Sheet
December 31, 20Y2 and 20Y1
   20Y2    20Y1
Assets
Current assets
Cash $609,330 $540,520
Marketable securities 922,220 895,730
Accounts receivable (net) 620,500 584,000
Inventories 467,200 365,000
Prepaid expenses 115,278 108,100
Total current assets $2,734,528 $2,493,350
Long-term investments 1,340,612 312,001
Property, plant, and equipment (net) 3,640,000 3,276,000
Total assets $7,715,140 $6,081,351
Liabilities
Current liabilities $854,540 $1,001,951
Long-term liabilities:
Mortgage note payable, 8% $1,260,000 $0
Bonds payable, 8% 1,540,000 1,540,000
Total long-term liabilities $2,800,000 $1,540,000
Total liabilities $3,654,540 $2,541,951
Stockholders' Equity
Preferred $0.70 stock, $50 par $500,000 $500,000
Common stock, $10 par 570,000 570,000
Retained earnings 2,990,600 2,469,400
Total stockholders' equity $4,060,600 $3,539,400
Total liabilities and stockholders' equity $7,715,140 $6,081,351
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 (436 Votes)

Solution 1 Working Capital 20Y2 Total Current Assets A 2734528 Total Current Liabilities B 854540 Working Capital Total Current Assets Total Current Liabilities 1879988 2 Current Ratio 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 common stock was $ 66 onDecember 31, 20Y2.Marshall Inc.Comparative Retained EarningsStatementFor the Years Ended December 31, 20Y2 and20Y1 20Y2 20Y1Retained earnings, January 1$2,469,400$2,083,800Net income562,400426,800Total$3,031,800$2,510,600Dividends:On preferred stock$7,000$7,000On common stock34,20034,200Total dividends$41,200$41,200Retained earnings, December 31$2,990,600$2,469,400Marshall Inc.Comparative Income StatementFor the Years Ended December 31, 20Y2 and20Y1 20Y2 20Y1Sales$3,372,600$3,107,340Cost of goods sold1,165,0801,071,870Gross profit$2,207,520$2,035,470Selling expenses$749,290$922,170Administrative expenses638,290541,590Total operating expenses$1,387,580$1,463,760Income from operations$819,940$571,710Other revenue43,16036,490$863,100$608,200Other expense (interest)224,000123,200Income before income tax$639,100$485,000Income tax expense76,70058,200Net income$562,400$426,800Marshall Inc.Comparative Balance SheetDecember 31, 20Y2 and 20Y1 20Y2 20Y1AssetsCurrent assetsCash$609,330$540,520Marketable securities922,220895,730Accounts receivable (net)620,500584,000Inventories467,200365,000Prepaid expenses115,278108,100Total current assets$2,734,528$2,493,350Long-term investments1,340,612312,001Property, plant, and equipment (net)3,640,0003,276,000Total assets$7,715,140$6,081,351LiabilitiesCurrent liabilities$854,540$1,001,951Long-term liabilities:Mortgage note payable, 8%$1,260,000$0Bonds payable, 8%1,540,0001,540,000Total long-term liabilities$2,800,000$1,540,000Total liabilities$3,654,540$2,541,951Stockholders' EquityPreferred $0.70 stock, $50 par$500,000$500,000Common stock, $10 par570,000570,000Retained earnings2,990,6002,469,400Total stockholders' equity$4,060,600$3,539,400Total liabilities and stockholders' equity$7,715,140$6,081,351Required: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			$2,469,400	$2,083,800
Net income			562,400	426,800
Total			$3,031,800	$2,510,600
Dividends:
	On preferred stock		$7,000	$7,000
	On common stock		34,200	34,200
		Total dividends	$41,200	$41,200
Retained earnings, December 31			$2,990,600	$2,469,400

Marshall Inc.
Comparative Income Statement
For the Years Ended December 31, 20Y2 and20Y1
	20Y2	20Y1
Sales	$3,372,600	$3,107,340
Cost of goods sold	1,165,080	1,071,870
Gross profit	$2,207,520	$2,035,470
Selling expenses	$749,290	$922,170
Administrative expenses	638,290	541,590
Total operating expenses	$1,387,580	$1,463,760
Income from operations	$819,940	$571,710
Other revenue	43,160	36,490
	$863,100	$608,200
Other expense (interest)	224,000	123,200
Income before income tax	$639,100	$485,000
Income tax expense	76,700	58,200
Net income	$562,400	$426,800

Marshall Inc.
Comparative Balance Sheet
December 31, 20Y2 and 20Y1
			20Y2	20Y1
Assets
Current assets
	Cash		$609,330	$540,520
	Marketable securities		922,220	895,730
	Accounts receivable (net)		620,500	584,000
	Inventories		467,200	365,000
	Prepaid expenses		115,278	108,100
		Total current assets	$2,734,528	$2,493,350
Long-term investments			1,340,612	312,001
Property, plant, and equipment (net)			3,640,000	3,276,000
Total assets			$7,715,140	$6,081,351
Liabilities
Current liabilities			$854,540	$1,001,951
Long-term liabilities:
	Mortgage note payable, 8%		$1,260,000	$0
	Bonds payable, 8%		1,540,000	1,540,000
		Total long-term liabilities	$2,800,000	$1,540,000
Total liabilities			$3,654,540	$2,541,951
Stockholders' Equity
Preferred $0.70 stock, $50 par			$500,000	$500,000
Common stock, $10 par			570,000	570,000
Retained earnings			2,990,600	2,469,400
Total stockholders' equity			$4,060,600	$3,539,400
Total liabilities and stockholders' equity			$7,715,140	$6,081,351

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		%