50.1K

Verified Solution

Link Copied!

Measures of liquidity, Solvency, and Profitability

The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was $ 58 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			$1,802,125		$1,537,175
Net income			425,600		314,800
Total			$2,227,725		$1,851,975
Dividends:
	On preferred stock		$13,300		$13,300
	On common stock		36,550		36,550
		Total dividends	$49,850		$49,850
Retained earnings, December 31			$2,177,875		$1,802,125

Marshall Inc.
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
	20Y2		20Y1
Sales	$2,628,000		$2,421,260
Cost of goods sold	927,830		853,600
Gross profit	$1,700,170		$1,567,660
Selling expenses	$587,930		$723,500
Administrative expenses	500,820		424,920
Total operating expenses	$1,088,750		$1,148,420
Income from operations	$611,420		$419,240
Other revenue	32,180		26,760
	$643,600		$446,000
Other expense (interest)	160,000		88,000
Income before income tax	$483,600		$358,000
Income tax expense	58,000		43,200
Net income	$425,600		$314,800

Marshall Inc.
Comparative Balance Sheet
December 31, 20Y2 and 20Y1
			20Y2		20Y1
Assets
Current assets
	Cash		$549,670		$432,510
	Marketable securities		831,930		716,720
	Accounts receivable (net)		452,600		423,400
	Inventories		335,800		262,800
	Prepaid expenses		103,990		86,500
		Total current assets	$2,273,990		$1,921,930
Long-term investments			802,973		425,709
Property, plant, and equipment (net)			2,600,000		2,340,000
Total assets			$5,676,963		$4,687,639
Liabilities
Current liabilities			$689,088		$975,514
Long-term liabilities:
	Mortgage note payable, 8%		$900,000		$0
	Bonds payable, 8%		1,100,000		1,100,000
		Total long-term liabilities	$2,000,000		$1,100,000
Total liabilities			$2,689,088		$2,075,514
Stockholders' Equity
Preferred $0.70 stock, $20 par			$380,000		$380,000
Common stock, $10 par			430,000		430,000
Retained earnings			2,177,875		1,802,125
Total stockholders' equity			$2,987,875		$2,612,125
Total liabilities and stockholders' equity			$5,676,963		$4,687,639

Required:

Determine the following measures for 20Y2, rounding to one decimal place, except for 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.

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

See Answer