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28 Sep 2019
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 stockholdersâ equity % 14. Return on common stockholdersâ equity % 15. Earnings per share on common stock $ 16. Price-earnings ratio 17. Dividends per share of common stock $ 18. Dividend yield %
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 stockholdersâ equity | % | |
14. Return on common stockholdersâ equity | % | |
15. Earnings per share on common stock | $ | |
16. Price-earnings ratio | ||
17. Dividends per share of common stock | $ | |
18. Dividend yield | % |
Hubert KochLv2
28 Sep 2019