Measures of liquidity, Solvency, and Profitability The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was $ 59 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 $2,490,300 $2,110,600 Net income 532,000 432,300 Dividends: On preferred stock (7,000) (7,000) On common stock (45,600) (45,600) Retained earnings, December 31 $2,969,700 $2,490,300 Marshall Inc. Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Y1 Sales $3,055,050 $2,814,770 Cost of merchandise sold 1,160,700 1,067,840 Gross profit $1,894,350 $1,746,930 Selling expenses $610,240 $744,410 Administrative expenses 519,840 437,200 Total operating expenses $1,130,080 $1,181,610 Income from operations $764,270 $565,320 Other revenue and expense: Other revenue 40,230 36,080 Other expense (interest) (200,000) (110,400) Income before income tax expense $604,500 $491,000 Income tax expense 72,500 58,700 Net income $532,000 $432,300 Marshall Inc. Comparative Balance Sheet December 31, 20Y2 and 20Y1 20Y2 20Y1 Assets Current assets: Cash $542,410 $557,250 Marketable securities 820,950 923,430 Accounts receivable (net) 584,000 547,500 Inventories 438,000 335,800 Prepaid expenses 102,624 111,450 Total current assets $2,487,984 $2,475,430 Long-term investments 1,783,476 862,201 Property, plant, and equipment (net) 3,000,000 2,700,000 Total assets $7,271,460 $6,037,631 Liabilities Current liabilities $731,760 $1,097,331 Long-term liabilities: Mortgage note payable, 8% $1,120,000 $0 Bonds payable, 8% 1,380,000 1,380,000 Total long-term liabilities $2,500,000 $1,380,000 Total liabilities $3,231,760 $2,477,331 Stockholders' Equity Preferred $0.70 stock, $50 par $500,000 $500,000 Common stock, $10 par 570,000 570,000 Retained earnings 2,969,700 2,490,300 Total stockholders' equity $4,039,700 $3,560,300 Total liabilities and stockholders' equity $7,271,460 $6,037,631 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 $fill in the blank 1 2. Current ratio fill in the blank 2 3. Quick ratio fill in the blank 3 4. Accounts receivable turnover fill in the blank 4 5. Number of days' sales in receivables fill in the blank 5 days 6. Inventory turnover fill in the blank 6 7. Number of days' sales in inventory fill in the blank 7 days 8. Ratio of fixed assets to long-term liabilities fill in the blank 8 9. Ratio of liabilities to stockholders' equity fill in the blank 9 10. Times interest earned fill in the blank 10 11. Asset turnover fill in the blank 11 12. Return on total assets fill in the blank 12 % 13. Return on stockholders’ equity fill in the blank 13 % 14. Return on common stockholders’ equity fill in the blank 14 % 15. Earnings per share on common stock $fill in the blank 15 16. Price-earnings ratio fill in the blank 16 17. Dividends per share of common stock $fill in the blank 17 18. Dividend yield fill in the blank 18 %

Measures of liquidity, Solvency, and Profitability The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was $ 59 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 $2,490,300 $2,110,600 Net income 532,000 432,300 Dividends: On preferred stock (7,000) (7,000) On common stock (45,600) (45,600) Retained earnings, December 31 $2,969,700 $2,490,300 Marshall Inc. Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Y1 Sales $3,055,050 $2,814,770 Cost of merchandise sold 1,160,700 1,067,840 Gross profit $1,894,350 $1,746,930 Selling expenses $610,240 $744,410 Administrative expenses 519,840 437,200 Total operating expenses $1,130,080 $1,181,610 Income from operations $764,270 $565,320 Other revenue and expense: Other revenue 40,230 36,080 Other expense (interest) (200,000) (110,400) Income before income tax expense $604,500 $491,000 Income tax expense 72,500 58,700 Net income $532,000 $432,300 Marshall Inc. Comparative Balance Sheet December 31, 20Y2 and 20Y1 20Y2 20Y1 Assets Current assets: Cash $542,410 $557,250 Marketable securities 820,950 923,430 Accounts receivable (net) 584,000 547,500 Inventories 438,000 335,800 Prepaid expenses 102,624 111,450 Total current assets $2,487,984 $2,475,430 Long-term investments 1,783,476 862,201 Property, plant, and equipment (net) 3,000,000 2,700,000 Total assets $7,271,460 $6,037,631 Liabilities Current liabilities $731,760 $1,097,331 Long-term liabilities: Mortgage note payable, 8% $1,120,000 $0 Bonds payable, 8% 1,380,000 1,380,000 Total long-term liabilities $2,500,000 $1,380,000 Total liabilities $3,231,760 $2,477,331 Stockholders' Equity Preferred $0.70 stock, $50 par $500,000 $500,000 Common stock, $10 par 570,000 570,000 Retained earnings 2,969,700 2,490,300 Total stockholders' equity $4,039,700 $3,560,300 Total liabilities and stockholders' equity $7,271,460 $6,037,631 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 $fill in the blank 1 2. Current ratio fill in the blank 2 3. Quick ratio fill in the blank 3 4. Accounts receivable turnover fill in the blank 4 5. Number of days' sales in receivables fill in the blank 5 days 6. Inventory turnover fill in the blank 6 7. Number of days' sales in inventory fill in the blank 7 days 8. Ratio of fixed assets to long-term liabilities fill in the blank 8 9. Ratio of liabilities to stockholders' equity fill in the blank 9 10. Times interest earned fill in the blank 10 11. Asset turnover fill in the blank 11 12. Return on total assets fill in the blank 12 % 13. Return on stockholders’ equity fill in the blank 13 % 14. Return on common stockholders’ equity fill in the blank 14 % 15. Earnings per share on common stock $fill in the blank 15 16. Price-earnings ratio fill in the blank 16 17. Dividends per share of common stock $fill in the blank 17 18. Dividend yield fill in the blank 18 %

Financial Accounting

15th Edition

ISBN:9781337272124

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter17: Financial Statement Analysis

Section: Chapter Questions

Problem 4PA: Measures of liquidity, solvency, and profitability The comparative financial statements of Marshall...

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Measures of liquidity, Solvency, and Profitability

The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was $ 59 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	$2,490,300		$2,110,600
Net income	532,000		432,300
Dividends:
	On preferred stock	(7,000)		(7,000)
	On common stock	(45,600)		(45,600)
Retained earnings, December 31	$2,969,700		$2,490,300

Marshall Inc.
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
	20Y2	20Y1
Sales	$3,055,050		$2,814,770
Cost of merchandise sold	1,160,700		1,067,840
Gross profit	$1,894,350		$1,746,930
Selling expenses	$610,240		$744,410
Administrative expenses	519,840		437,200
Total operating expenses	$1,130,080		$1,181,610
Income from operations	$764,270		$565,320
Other revenue and expense:
Other revenue	40,230		36,080
Other expense (interest)	(200,000)		(110,400)
Income before income tax expense	$604,500		$491,000
Income tax expense	72,500		58,700
Net income	$532,000		$432,300

Marshall Inc.
Comparative Balance Sheet
December 31, 20Y2 and 20Y1
	20Y2	20Y1
Assets
Current assets:
	Cash	$542,410		$557,250
	Marketable securities	820,950		923,430
	Accounts receivable (net)	584,000		547,500
	Inventories	438,000		335,800
	Prepaid expenses	102,624		111,450
		Total current assets	$2,487,984		$2,475,430
Long-term investments	1,783,476		862,201
Property, plant, and equipment (net)	3,000,000		2,700,000
Total assets	$7,271,460		$6,037,631
Liabilities
Current liabilities	$731,760		$1,097,331
Long-term liabilities:
	Mortgage note payable, 8%	$1,120,000		$0
	Bonds payable, 8%	1,380,000		1,380,000
		Total long-term liabilities	$2,500,000		$1,380,000
Total liabilities	$3,231,760		$2,477,331
Stockholders' Equity
Preferred $0.70 stock, $50 par	$500,000		$500,000
Common stock, $10 par	570,000		570,000
Retained earnings	2,969,700		2,490,300
Total stockholders' equity	$4,039,700		$3,560,300
Total liabilities and stockholders' equity	$7,271,460		$6,037,631

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	$fill in the blank 1
2. Current ratio	fill in the blank 2
3. Quick ratio	fill in the blank 3
4. Accounts receivable turnover	fill in the blank 4
5. Number of days' sales in receivables	fill in the blank 5	days
6. Inventory turnover	fill in the blank 6
7. Number of days' sales in inventory	fill in the blank 7	days
8. Ratio of fixed assets to long-term liabilities	fill in the blank 8
9. Ratio of liabilities to stockholders' equity	fill in the blank 9
10. Times interest earned	fill in the blank 10
11. Asset turnover	fill in the blank 11
12. Return on total assets	fill in the blank 12	%
13. Return on stockholders’ equity	fill in the blank 13	%
14. Return on common stockholders’ equity	fill in the blank 14	%
15. Earnings per share on common stock	$fill in the blank 15
16. Price-earnings ratio	fill in the blank 16
17. Dividends per share of common stock	$fill in the blank 17
18. Dividend yield	fill in the blank 18	%

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