Solve the following problem. Especially Stuck on 11 Asset Turnover,12 Return on total asset and 13 Return on stockholders equity
Determine the following measures for 20Y2 (round to one decimal place, including percentages, except for per-share amounts):
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 | % |
Solve the following problem.
Measures of liquidity, solvency, and profitability
The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was $82.60 on December 31, 20Y2.
Marshall Inc. |
Comparative Retained Earnings Statement |
For the Years Ended December 31, 20Y2 and 20Y1 |
1 |
20Y2 |
20Y1 |
|
2 |
Retained earnings, January 1 |
$3,704,000.00 |
$3,264,000.00 |
3 |
Net income |
600,000.00 |
550,000.00 |
4 |
Total |
$4,304,000.00 |
$3,814,000.00 |
5 |
Dividends: |
||
6 |
On preferred stock |
$10,000.00 |
$10,000.00 |
7 |
On common stock |
100,000.00 |
100,000.00 |
8 |
Total dividends |
$110,000.00 |
$110,000.00 |
9 |
Retained earnings, December 31 |
$4,194,000.00 |
$3,704,000.00 |
Marshall Inc. |
Comparative Income Statement |
For the Years Ended December 31, 20Y2 and 20Y1 |
1 |
20Y2 |
20Y1 |
|
2 |
Sales |
$10,850,000.00 |
$10,000,000.00 |
3 |
Cost of goods sold |
6,000,000.00 |
5,450,000.00 |
4 |
Gross profit |
$4,850,000.00 |
$4,550,000.00 |
5 |
Selling expenses |
$2,170,000.00 |
$2,000,000.00 |
6 |
Administrative expenses |
1,627,500.00 |
1,500,000.00 |
7 |
Total operating expenses |
$3,797,500.00 |
$3,500,000.00 |
8 |
Income from operations |
$1,052,500.00 |
$1,050,000.00 |
9 |
Other income |
99,500.00 |
20,000.00 |
10 |
$1,152,000.00 |
$1,070,000.00 |
|
11 |
Other expense (interest) |
132,000.00 |
120,000.00 |
12 |
Income before income tax |
$1,020,000.00 |
$950,000.00 |
13 |
Income tax expense |
420,000.00 |
400,000.00 |
14 |
Net income |
$600,000.00 |
$550,000.00 |
Marshall Inc. |
Comparative Balance Sheet |
December 31, 20Y2 and 20Y1 |
1 |
20Y2 |
20Y1 |
|
2 |
Assets |
||
3 |
Current assets: |
||
4 |
Cash |
$1,050,000.00 |
$950,000.00 |
5 |
Marketable securities |
301,000.00 |
420,000.00 |
6 |
Accounts receivable (net) |
585,000.00 |
500,000.00 |
7 |
Inventories |
420,000.00 |
380,000.00 |
8 |
Prepaid expenses |
108,000.00 |
20,000.00 |
9 |
Total current assets |
$2,464,000.00 |
$2,270,000.00 |
10 |
Long-term investments |
800,000.00 |
800,000.00 |
11 |
Property, plant, and equipment (net) |
5,760,000.00 |
5,184,000.00 |
12 |
Total assets |
$9,024,000.00 |
$8,254,000.00 |
13 |
Liabilities |
||
14 |
Current liabilities |
$880,000.00 |
$800,000.00 |
15 |
Long-term liabilities: |
||
16 |
Mortgage note payable, 6%, |
$200,000.00 |
$0.00 |
17 |
Bonds payable, 4%, |
3,000,000.00 |
3,000,000.00 |
18 |
Total long-term liabilities |
$3,200,000.00 |
$3,000,000.00 |
19 |
Total liabilities |
$4,080,000.00 |
$3,800,000.00 |
20 |
Stockholders’ Equity |
||
21 |
Preferred 4% stock, $5 par |
$250,000.00 |
$250,000.00 |
22 |
Common stock, $5 par |
500,000.00 |
500,000.00 |
23 |
Retained earnings |
4,194,000.00 |
3,704,000.00 |
24 |
Total stockholders’ equity |
$4,944,000.00 |
$4,454,000.00 |
25 |
Total liabilities and stockholders’ equity |
$9,024,000.00 |
$8,254,000.00 |
Determine the following measures for 20Y2 (round to one decimal place, including percentages, except for per-share amounts):
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 |
Computation of Asset Turnover |
Average Asset=( Opening Asset + Closing Asset)/2 |
=(9024+8254)/2=8639000 |
Sales= $10850000 |
Asset Turover Ratio= Ssales/ Average Asset |
= 10850000/8639000= 1.256 times |
Computation of Retunr on Total Asset |
Return on Total Asset= Net Income After Tax/ Average Asset |
=600000/8639000=6.94% |
Computation of Retunr on Shareholder Equity |
Return on Share holder Equity = Net Income After Tax/ Average Equity |
=600000/4699000=12.8% |
Average Equity= (Beginign + Closing)/2 |
(4944000+4454000)/2=4699000 |
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