Question

The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was $ 67 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			$ 4,737,650		$ 3,986,450
Net income			1,110,000		816,500
Total			$5,847,650		$ 4,802,950
Dividends:
	On preferred stock		$ 14,000		$ 14,000
	On common stock		51,300		51,300
		Total dividends	$ 65,300		$ 65,300
Retained earnings, December 31			$ 5,782,350		$ 4,737,650

Marshall Inc.
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
	20Y2		20Y1
Sales	$ 6,303,915		$ 5,808,110
Cost of goods sold	2,353,520		2,165,240
Gross profit	$ 3,950,395		$ 3,642,870
Selling expenses	$ 1,289,120		$ 1,620,370
Administrative expenses	1,098,145		951,650
Total operating expenses	2,387,265		2,572,020
Income from operations	$ 1,563,130		$ 1,070,850
Other revenue	82,270		68,350
	$ 1,645,400		$ 1,139,200
Other expense (interest)	384,000		211,200
Income before income tax	$ 1,261,400		$ 928,000
Income tax expense	151,400		111,500
Net income	$ 1,110,000		$ 816,500

Marshall Inc.
Comparative Balance Sheet
December 31, 20Y2 and 20Y1
			Dec. 31, 20Y2		Dec. 31, 20Y1
Assets
Current assets
	Cash		$ 966,970		$ 1,176,500
	Marketable securities		1,463,530		1,949,620
	Accounts receivable (net)		1,138,800		1,073,100
	Inventories		861,400		657,000
	Prepaid expenses		182,940		235,300
		Total current assets	$ 4,613,640		$ 5,091,520
Long-term investments			3,406,590		1,710,821
Property, plant, and equipment (net)			6,240,000		5,616,000
Total assets			$ 14,260,230		$ 12,418,341
Liabilities
Current liabilities			$ 1,537,880		$ 2,900,691
Long-term liabilities
	Mortgage note payable, 8 %		$ 2,160,000		$ 0
	Bonds payable, 8 %		2,640,000		2,640,000
		Total long-term liabilities	$ 4,800,000		$ 2,640,000
Total liabilities			$ 6,337,880		$ 5,540,691
Stockholders' Equity
Preferred $ 0.70 stock, $ 50 par			$ 1,000,000		$ 1,000,000
Common stock, $ 10 par			1,140,000		1,140,000
Retained earnings			5,782,350		4,737,650
Total stockholders' equity			$ 7,922,350		$ 6,877,650
Total liabilities and stockholders' equity			$ 14,260,230		$ 12,418,341

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

Solution:

(1) Working Capital:

=Total current assets – Total Current liabilities

= $ 4,613,640 - $ 1,537,880

= $ 3,075,760 (Answer)

(2) Current ratio

=Total current assets / Total Current liabilities

= $ 4,613,640 / $ 1,537,880

= 3 (Answer)

(3) Quick ratio

= (Total current assets- Inventories- Prepaid expenses) / Total Current liabilities

= ($ 4,613,640 -861,400 -182,940) / $ 1,537,880

= $ 3,569,300 / $ 1,537,880

=2.3 (Answer)

(4) Accounts receivable turnover

=Net Sales / Average accounts receivable

=$ 6,303,915 / [($1,073,100 + $1,138,800)/2]

=$ 6,303,915 / $ 1,105,950

= 5.7(Answer)

Note: As per answering guidelines, I am submitting answers for first 4 parts. For rest of the answers, post questions separately.