1.

Six Measures of Solvency or Profitability

The following data were taken from the financial statements of Gates Inc. for the current fiscal year.

Property, plant, and equipment (net)						$1,281,600
Liabilities:
	Current liabilities			$213,000
	Note payable, 6%, due in 15 years			1,068,000
	Total liabilities					$1,281,000
Stockholders' equity:
	Preferred $4 stock, $100 par (no change during year)					$960,750
	Common stock, $10 par (no change during year)					960,750
Retained earnings:
	Balance, beginning of year	$1,024,000
	Net income	472,000		$1,496,000
	Preferred dividends	$38,430
	Common dividends	176,570		215,000
	Balance, end of year					1,281,000
Total stockholders' equity						$3,202,500
Sales						$28,850,250
Interest expense						$64,080

Assuming that total assets were $4,259,000 at the beginning of the current fiscal year, determine the following. When required, round to one decimal place.

a. Ratio of fixed assets to long-term liabilities
b. Ratio of liabilities to stockholders' equity
c. Asset turnover
d. Return on total assets	%
e. Return on stockholders equity	%
f. Return on common stockholders' equity	%

2.

Measures of liquidity, Solvency, and Profitability

The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was $ 56 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			$4,770,100		$4,018,100
Net income			1,050,800		823,000
Total			$5,820,900		$4,841,100
Dividends:
	On preferred stock		$14,000		$14,000
	On common stock		57,000		57,000
		Total dividends	$71,000		$71,000
Retained earnings, December 31			$5,749,900		$4,770,100

Marshall Inc.
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
	20Y2		20Y1
Sales	$5,861,535		$5,400,550
Cost of goods sold	2,180,510		2,006,070
Gross profit	$3,681,025		$3,394,480
Selling expenses	$1,178,190		$1,459,740
Administrative expenses	1,003,645		857,310
Total operating expenses	$2,181,835		$2,317,050
Income from operations	$1,499,190		$1,077,430
Other revenue	78,910		68,770
	$1,578,100		$1,146,200
Other expense (interest)	384,000		211,200
Income before income tax	$1,194,100		$935,000
Income tax expense	143,300		112,000
Net income	$1,050,800		$823,000

Marshall Inc.
Comparative Balance Sheet
December 31, 20Y2 and 20Y1
			20Y2		20Y1
Assets
Current assets
	Cash		$1,055,440		$1,033,180
	Marketable securities		1,597,420		1,712,120
	Accounts receivable (net)		1,138,800		1,073,100
	Inventories		846,800		657,000
	Prepaid expenses		199,684		206,640
		Total current assets	$4,838,144		$4,682,040
Long-term investments			4,083,676		1,985,569
Property, plant, and equipment (net)			5,280,000		4,752,000
Total assets			$14,201,820		$11,419,609
Liabilities
Current liabilities			$1,511,920		$1,869,509
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			$6,311,920		$4,509,509
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			5,749,900		4,770,100
Total stockholders' equity			$7,889,900		$6,910,100
Total liabilities and stockholders' equity			$14,201,820		$11,419,609

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		%