Question
Please, someone, help me! If you do please show working out for me to understand. Thank you. Measures of liquidity, Solvency, and Profitability The comparative
Please, someone, help me! If you do please show working out for me to understand. Thank you.
Measures of liquidity, Solvency, and Profitability The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was $ 65 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 | $1,262,900 | $1,069,600 | ||||
Net income | 300,000 | 219,100 | ||||
Total | $1,562,900 | $1,288,700 | ||||
Dividends: | ||||||
On preferred stock | $9,800 | $9,800 | ||||
On common stock | 16,000 | 16,000 | ||||
Total dividends | $25,800 | $25,800 | ||||
Retained earnings, December 31 | $1,537,100 | $1,262,900 |
Marshall Inc. | ||||
Comparative Income Statement | ||||
For the Years Ended December 31, 20Y2 and 20Y1 | ||||
20Y2 | 20Y1 | |||
Sales | $1,799,450 | $1,657,950 | ||
Cost of goods sold | 613,200 | 564,140 | ||
Gross profit | $1,186,250 | $1,093,810 | ||
Selling expenses | $404,140 | $502,320 | ||
Administrative expenses | 344,260 | 295,010 | ||
Total operating expenses | $748,400 | $797,330 | ||
Income from operations | $437,850 | $296,480 | ||
Other revenue | 23,050 | 18,920 | ||
$460,900 | $315,400 | |||
Other expense (interest) | 120,000 | 66,400 | ||
Income before income tax | $340,900 | $249,000 | ||
Income tax expense | 40,900 | 29,900 | ||
Net income | $300,000 | $219,100 |
Marshall Inc. | |||||||
Comparative Balance Sheet | |||||||
December 31, 20Y2 and 20Y1 | |||||||
20Y2 | 20Y1 | ||||||
Assets | |||||||
Current assets | |||||||
Cash | $243,620 | $332,080 | |||||
Marketable securities | 368,720 | 550,300 | |||||
Accounts receivable (net) | 321,200 | 299,300 | |||||
Inventories | 248,200 | 189,800 | |||||
Prepaid expenses | 46,091 | 66,420 | |||||
Total current assets | $1,227,831 | $1,437,900 | |||||
Long-term investments | 1,182,659 | 584,178 | |||||
Property, plant, and equipment (net) | 1,650,000 | 1,485,000 | |||||
Total assets | $4,060,490 | $3,507,078 | |||||
Liabilities | |||||||
Current liabilities | $423,390 | $814,178 | |||||
Long-term liabilities: | |||||||
Mortgage note payable, 8% | $670,000 | $0 | |||||
Bonds payable, 8% | 830,000 | 830,000 | |||||
Total long-term liabilities | $1,500,000 | $830,000 | |||||
Total liabilities | $1,923,390 | $1,644,178 | |||||
Stockholders' Equity | |||||||
Preferred $0.70 stock, $20 par | $280,000 | $280,000 | |||||
Common stock, $10 par | 320,000 | 320,000 | |||||
Retained earnings | 1,537,100 | 1,262,900 | |||||
Total stockholders' equity | $2,137,100 | $1,862,900 | |||||
Total liabilities and stockholders' equity | $4,060,490 | $3,507,078 |
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 | % |
Feedback
1. Subtract current liabilities from current assets.
2. Divide current assets by current liabilities.
3. Divide quick assets by current liabilities. Quick assets are cash, temporary investments, and receivables.
4. Divide sales by average accounts receivable. Average Accounts receivable = (Beginning Net Accounts Receivable + Ending Net Accounts Receivable) 2.
5. Divide average accounts receivable by average daily sales. Average Accounts receivable = (Beginning Net Accounts Receivable + Ending Net Accounts Receivable) 2. Average daily sales are sales divided by 365 days.
6. Divide cost of goods sold by average inventory. Average Inventory = (Beginning Inventories + Ending Inventories) 2.
7. Divide average inventory by average daily cost of goods sold. Average Inventory = (Beginning Inventories + Ending Inventories) 2. Average daily cost of goods sold is cost of goods sold divided by 365 days.
8. Divide property, plant, and equipment (net) by long-term liabilities.
9. Divide total liabilities by total stockholders' equity.
10. Divide the sum of income before income tax plus interest expense by interest expense.
11. Divide sales by average total assets. Average total assets = (Beginning total assets + Ending total assets) 2.
12. Divide the sum of net income plus interest expense by average total assets. Average total assets = (Beginning total assets + Ending total assets) 2.
13. Divide net income by average total stockholders' equity. Average total stockholders' equity = (Beginning total stockholders' equity + Ending total stockholders' equity) 2.
14. Divide net income minus preferred dividends from the retained earnings statement by average common stockholders' equity. Common stockholders' equity = Common stock + Retained earnings. Average common stockholders' equity = (Beginning common stockholders' equity + Ending common stockholders' equity) 2.
15. Divide net income minus preferred dividends from the retained earnings statement by common shares outstanding (common stock par value).
16. Divide common market share price by common earnings per share (use answer from requirement 15).
17. Divide common dividends (from Retained Earnings Statement) by common shares outstanding (common stock par value).
18. Divide common dividends per share (use answer from requirement 17) by market share price.
804,441 1. Working capital 2. Current ratio 3. Quick ratio 4. Accounts receivable turnover 5. Number of days' sales in receivables 2 x 11.2 x 32.4 x days 4.9 X 336 x days 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 20 X % 28 X % 12.5 X % 6.3 1.0 x 50 x 80 X % 16. Price-earnings ratio 17. Dividends per share of common stock 18. Dividend yieldStep by Step Solution
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