Measures of liquidity, Solvency, and ProfitabilityThe 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 StatementFor the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Y1Retained earnings, January 1$4,135,050 $3,490,250 Net income960,000 714,900 Total$5,095,050 $4,205,150 Dividends: On preferred stock$11,900 $11,900 On common stock58,200 58,200 Total dividends$70,100 $70,100 Retained earnings, December 31$5,024,950 $4,135,050 Marshall Inc.Comparative Income StatementFor the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Y1Sales$5,560,775 $5,123,430 Cost of goods sold2,058,600 1,893,910 Gross profit$3,502,175 $3,229,520 Selling expenses$1,138,660 $1,431,030 Administrative expenses969,965 840,440 Total operating expenses$2,108,625 $2,271,470 Income from operations$1,393,550 $958,050 Other revenue73,350 61,150 $1,466,900 $1,019,200 Other expense (interest)376,000 207,200 Income before income tax$1,090,900 $812,000 Income tax expense130,900 97,100 Net income$960,000 $714,900 Marshall Inc.Comparative Balance SheetDecember 31, 20Y2 and 20Y1 20Y2 20Y1Assets Current assets Cash$1,002,590 $1,005,340 Marketable securities1,517,440 1,666,000 Accounts receivable (net)1,043,900 978,200 Inventories773,800 598,600 Prepaid expenses189,681 201,070 Total current assets$4,527,411 $4,449,210 Long-term investments2,367,994 903,528 Property, plant, and equipment (net)6,110,000 5,499,000 Total assets$13,005,405 $10,851,738 LiabilitiesCurrent liabilities$1,460,455 $2,306,688 Long-term liabilities: Mortgage note payable, 8%$2,110,000 $0 Bonds payable, 8%2,590,000 2,590,000 Total long-term liabilities$4,700,000 $2,590,000 Total liabilities$6,160,455 $4,896,688 Stockholders' Equity Preferred $0.70 stock, $50 par$850,000 $850,000 Common stock, $10 par970,000 970,000 Retained earnings5,024,950 4,135,050 Total stockholders' equity$6,844,950 $5,955,050 Total liabilities and stockholders' equity$13,005,405 $10,851,738 Required:Determine the following measures for 20Y2, rounding to one decimal place, except for dollar amounts, which should be rounded to the nearest cent. Use the rounded answer of the requirement for subsequent requirement, if required. Assume 365 days a year.1. Working capital$fill in the blank 1 2. Current ratiofill in the blank 2 3. Quick ratiofill in the blank 3 4. Accounts receivable turnoverfill in the blank 4 5. Number of days' sales in receivablesfill in the blank 5days6. Inventory turnoverfill in the blank 6 7. Number of days' sales in inventoryfill in the blank 7days8. Ratio of fixed assets to long-term liabilitiesfill in the blank 8 9. Ratio of liabilities to stockholders' equityfill in the blank 9 10. Times interest earnedfill in the blank 10 11. Asset turnoverfill in the blank 11 12. Return on total assetsfill in the blank 12%13. Return on stockholders’ equityfill in the blank 13%14. Return on common stockholders’ equityfill in the blank 14%15. Earnings per share on common stock$fill in the blank 15 16. Price-earnings ratiofill in the blank 16 17. Dividends per share of common stock$fill in the blank 17 18. Dividend yieldfill in the blank 18%

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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	$4,135,050		$3,490,250
Net income	960,000		714,900
Total	$5,095,050		$4,205,150
Dividends:
	On preferred stock	$11,900		$11,900
	On common stock	58,200		58,200
		Total dividends	$70,100		$70,100
Retained earnings, December 31	$5,024,950		$4,135,050

Marshall Inc.
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
	20Y2	20Y1
Sales	$5,560,775		$5,123,430
Cost of goods sold	2,058,600		1,893,910
Gross profit	$3,502,175		$3,229,520
Selling expenses	$1,138,660		$1,431,030
Administrative expenses	969,965		840,440
Total operating expenses	$2,108,625		$2,271,470
Income from operations	$1,393,550		$958,050
Other revenue	73,350		61,150
	$1,466,900		$1,019,200
Other expense (interest)	376,000		207,200
Income before income tax	$1,090,900		$812,000
Income tax expense	130,900		97,100
Net income	$960,000		$714,900

Marshall Inc.
Comparative Balance Sheet
December 31, 20Y2 and 20Y1
	20Y2	20Y1
Assets
Current assets
	Cash	$1,002,590		$1,005,340
	Marketable securities	1,517,440		1,666,000
	Accounts receivable (net)	1,043,900		978,200
	Inventories	773,800		598,600
	Prepaid expenses	189,681		201,070
		Total current assets	$4,527,411		$4,449,210
Long-term investments	2,367,994		903,528
Property, plant, and equipment (net)	6,110,000		5,499,000
Total assets	$13,005,405		$10,851,738
Liabilities
Current liabilities	$1,460,455		$2,306,688
Long-term liabilities:
	Mortgage note payable, 8%	$2,110,000		$0
	Bonds payable, 8%	2,590,000		2,590,000
		Total long-term liabilities	$4,700,000		$2,590,000
Total liabilities	$6,160,455		$4,896,688
Stockholders' Equity
Preferred $0.70 stock, $50 par	$850,000		$850,000
Common stock, $10 par	970,000		970,000
Retained earnings	5,024,950		4,135,050
Total stockholders' equity	$6,844,950		$5,955,050
Total liabilities and stockholders' equity	$13,005,405		$10,851,738

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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