Measures of liquidity, solvency, and profitability The comparative financial statements of Marshall Inc. are as follows. The...

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Measures of liquidity, solvency, and profitability
The comparative financial statements of Marshall Inc. are asfollows. The market price of Marshall common stock was $82.60 onDecember 31, 20Y2.
Marshall Inc.
Comparative Retained EarningsStatement
For the Years Ended December 31, 20Y2 and20Y1
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)
Increase in retained earnings $ 490,000 $ 440,000
Retained earnings, December 31 $4,194,000 $3,704,000

Marshall Inc.
Comparative Income Statement
For the Years Ended December 31, 20Y2 and20Y1
20Y2 20Y1
Sales $ 10,850,000 $10,000,000
Cost of goods 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)
Operating income $ 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
Determine the following measures for 20Y2. Round to one decimalplace, including percentages, except for per-share amounts, whichshould be rounded to the nearest cent.
1. Working Capital $
2. Current ratio
3. Quick ratio
4. Accounts receivable turnover
5. Number of days’ sales in receivables
6. Inventory turnover
7. Number of days’ sales in inventory
8. Ratio of fixed assets to long-term liabilities
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

3.7 Ratings (677 Votes)

Solution 1 Working Capital 20Y2 Total Current Assets A 2464000 Total Current Liabilities B 880000 Working Capital Total Current Assets Total Current Liabilities 1584000 2 Current Ratio See Answer

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Measures of liquidity, solvency, and profitabilityThe comparative financial statements of Marshall Inc. are asfollows. The market price of Marshall common stock was $82.60 onDecember 31, 20Y2.Marshall Inc.Comparative Retained EarningsStatementFor the Years Ended December 31, 20Y2 and20Y120Y220Y1Retained earnings, January 1$3,704,000$3,264,000Net income$ 600,000$ 550,000Dividends:On preferred stock(10,000)(10,000)On common stock(100,000)(100,000)Increase in retained earnings$ 490,000$ 440,000Retained earnings, December 31$4,194,000$3,704,000 Marshall Inc.Comparative Income StatementFor the Years Ended December 31, 20Y2 and20Y120Y220Y1Sales$ 10,850,000$10,000,000Cost of goods sold(6,000,000)(5,450,000)Gross profit$ 4,850,000$ 4,550,000Selling expenses$ (2,170,000)$ (2,000,000)Administrative expenses(1,627,500)(1,500,000)Total operating expenses$(3,797,500)$ (3,500,000)Operating income$ 1,052,500$ 1,050,000Other revenue and expense:Other revenue99,50020,000Other expense (interest)(132,000)(120,000)Income before income tax expense$ 1,020,000$ 950,000Income tax expense(420,000)(400,000)Net income$ 600,000$ 550,000 Marshall Inc.Comparative Balance SheetDecember 31, 20Y2 and 20Y120Y220Y1AssetsCurrent assets:Cash$1,050,000$ 950,000Marketable securities301,000420,000Accounts receivable (net)585,000500,000Inventories420,000380,000Prepaid expenses108,00020,000Total current assets$ 2,464,000$2,270,000Long-term investments800,000800,000Property, plant, and equipment (net)5,760,0005,184,000Total assets$ 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, $5 par500,000500,000Retained earnings4,194,0003,704,000Total stockholders’ equity$ 4,944,000$4,454,000Total liabilities and stockholders’ equity$ 9,024,000$8,254,000Determine the following measures for 20Y2. Round to one decimalplace, including percentages, except for per-share amounts, whichshould be rounded to the nearest cent.1. Working Capital$ 2. 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 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	$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)
Increase in retained earnings	$ 490,000	$ 440,000
Retained earnings, December 31	$4,194,000	$3,704,000

Marshall Inc.
Comparative Income Statement
For the Years Ended December 31, 20Y2 and20Y1
	20Y2	20Y1
Sales	$ 10,850,000	$10,000,000
Cost of goods 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)
Operating income	$ 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

1. Working Capital	$
2. Current ratio
3. Quick ratio
4. Accounts receivable turnover
5. Number of days’ sales in receivables
6. Inventory turnover
7. Number of days’ sales in inventory
8. Ratio of fixed assets to long-term liabilities
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		%