Question

Measures of liquidity, Solvency and Profitability

The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall Inc. common stock was $ 51 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			$ 3,647,550		$ 3,100,450
Net income			772,800		635,000
Total			$ 4,244,550		$ 3,735,450
Dividends
	On preferred stock		$ 10,500		$ 10,500
	On common stock		77,400		77,400
		Total dividends	$ 87,900		$ 87,900
Retained earnings, December 31			$ 4,332,450		$ 3,647,550

Marshall Inc.
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
	20Y2		20Y1
Sales	$ 5,101,970		$ 4,700,720
Cost of goods sold	1,714,770		1,577,590
Gross profit	$ 3,387,200		$ 3,123,130
Selling expenses	$ 1,210,310		$ 1,432,940
Administrative expenses	1,031,000		841,560
Total operating expenses	2,241,310		2,274,500
Income from operations	$ 1,145,890		$ 848,630
Other income	60,310		54,170
	$ 1,206,200		$ 902,800
Other expense (interest)	328,000		180,800
Income before income tax	$ 878,200		$ 722,000
Income tax expense	105,400		87,000
Net income	$ 772,800		$ 635,000

Marshall Inc.
Comparative Balance Sheet
December 31, 20Y2 and 20Y1
			Dec. 31, 20Y2		Dec. 31, 20Y1
Assets
Current assets
	Cash		$ 940,640		$ 673,320
	Marketable securities		1,423,680		1,115,790
	Accounts receivable (net)		905,200		854,100
	Inventories		671,600		511,000
	Prepaid expenses		177,957		134,660
		Total current assets	$ 4,119,077		$ 3,288,870
Long-term investments			2,661,578		673,756
Property, plant, and equipment (net)			4,510,000		4,059,000
Total assets			$ 11,290,655		$ 8,021,626
Liabilities
Current liabilities			$ 1,248,205		$ 504,076
Long-term liabilities
	Mortgage note payable, 8 %		$ 1,840,000		$ 0
	Bonds payable, 8 %		2,260,000		2,260,000
		Total long-term liabilities	$ 4,100,000		$ 2,260,000
Total liabilities			$ 5,348,205		$ 2,764,076
Stockholders' Equity
Preferred $ 0.70 stock, $ 50 par			$ 750,000		$ 750,000
Common stock, $ 10 par			860,000		860,000
Retained earnings			4,332,450		3,647,550
	Total stockholders' equity		$ 5,942,450		$ 5,257,550
Total liabilities and stockholders' equity			$ 11,290,655		$ 8,021,626

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.

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-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 1

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