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Calculator Measures of liquidity, Solvency and Profitability The comparative financial statements of Stargel Inc. are as follows. The market price of Stargel common stock was

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    Measures of liquidity, Solvency and Profitability

    The comparative financial statements of Stargel Inc. are as follows. The market price of Stargel common stock was $119.70 on December 31, 20Y2.

    Stargel Inc.
    Comparative Retained Earnings Statement
    For the Years Ended December 31, 20Y2 and 20Y1
    20Y2 20Y1
    Retained earnings, January 1 $5,375,000 $4,545,000
    Net income $900,000 $925,000
    Dividends:
    On preferred stock (45,000) (45,000)
    On common stock (50,000) (50,000)
    Increase in retained earnings $805,000 $830,000
    Retained earnings, December 31 $6,180,000 $5,375,000
    Stargel Inc.
    Comparative Income Statement
    For the Years Ended December 31, 20Y2 and 20Y1
    20Y2 20Y1
    Sales $10,000,000 $9,400,000
    Cost of goods sold (5,350,000) (4,950,000)
    Gross profit $4,650,000 $4,450,000
    Selling expenses $(2,000,000) $(1,880,000)
    Administrative expenses (1,500,000) (1,410,000)
    Total operating expenses $(3,500,000) $(3,290,000)
    Operating income $1,150,000 $1,160,000
    Other revenue and expense:
    Other revenue 150,000 140,000
    Other expense (interest) (170,000) (150,000)
    Income before income tax expense $1,130,000 $1,150,000
    Income tax expense (230,000) (225,000)
    Net income $900,000 $925,000
    Stargel Inc.
    Comparative Balance Sheet
    December 31, 20Y2 and 20Y1
    20Y2 20Y1
    Assets
    Current assets:
    Cash $500,000 $400,000
    Marketable securities 1,010,000 1,000,000
    Accounts receivable (net) 740,000 510,000
    Inventories 1,190,000 950,000
    Prepaid expenses 250,000 229,000
    Total current assets $3,690,000 $3,089,000
    Long-term investments 2,350,000 2,300,000
    Property, plant, and equipment (net) 3,740,000 3,366,000
    Total assets $9,780,000 $8,755,000
    Liabilities
    Current liabilities $900,000 $880,000
    Long-term liabilities:
    Mortgage note payable, 10% $200,000 $0
    Bonds payable, 10% 1,500,000 1,500,000
    Total long-term liabilities $1,700,000 $1,500,000
    Total liabilities $2,600,000 $2,380,000
    Stockholders' Equity
    Preferred $0.90 stock, $10 par $500,000 $500,000
    Common stock, $5 par 500,000 500,000
    Retained earnings 6,180,000 5,375,000
    Total stockholders' equity $7,180,000 $6,375,000
    Total liabilities and stockholders' equity $9,780,000 $8,755,000

    Required:

    Determine the following measures for 20Y2, rounding to one decimal place, except 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 $ 279000
    2. Current ratio 4.1
    3. Quick ratio 2.5 or 2.7
    4. Accounts receivable turnover 16
    5. Number of days' sales in receivables 22.8days
    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 %

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