Question
The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was $82.60 on December 31, 20Y2. Marshall Inc.
The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was $82.60 on December 31, 20Y2.
Marshall Inc. |
Comparative Retained Earnings Statement |
For the Years Ended December 31, 20Y2 and 20Y1 |
1 |
| 20Y2 | 20Y1 |
2 | Retained earnings, January 1 | $3,704,000.00 | $3,264,000.00 |
3 | Net income | 600,000.00 | 550,000.00 |
4 | Total | $4,304,000.00 | $3,814,000.00 |
5 | Dividends: |
|
|
6 | On preferred stock | $10,000.00 | $10,000.00 |
7 | On common stock | 100,000.00 | 100,000.00 |
8 | Total dividends | $110,000.00 | $110,000.00 |
9 | Retained earnings, December 31 | $4,194,000.00 | $3,704,000.00 |
Marshall Inc. |
Comparative Income Statement |
For the Years Ended December 31, 20Y2 and 20Y1 |
1 |
| 20Y2 | 20Y1 |
2 | Sales | $10,850,000.00 | $10,000,000.00 |
3 | Cost of goods sold | 6,000,000.00 | 5,450,000.00 |
4 | Gross profit | $4,850,000.00 | $4,550,000.00 |
5 | Selling expenses | $2,170,000.00 | $2,000,000.00 |
6 | Administrative expenses | 1,627,500.00 | 1,500,000.00 |
7 | Total operating expenses | $3,797,500.00 | $3,500,000.00 |
8 | Income from operations | $1,052,500.00 | $1,050,000.00 |
9 | Other income | 99,500.00 | 20,000.00 |
10 |
| $1,152,000.00 | $1,070,000.00 |
11 | Other expense (interest) | 132,000.00 | 120,000.00 |
12 | Income before income tax | $1,020,000.00 | $950,000.00 |
13 | Income tax expense | 420,000.00 | 400,000.00 |
14 | Net income | $600,000.00 | $550,000.00 |
Marshall Inc. |
Comparative Balance Sheet |
December 31, 20Y2 and 20Y1 |
1 |
| 20Y2 | 20Y1 |
2 | Assets |
|
|
3 | Current assets: |
|
|
4 | Cash | $1,050,000.00 | $950,000.00 |
5 | Marketable securities | 301,000.00 | 420,000.00 |
6 | Accounts receivable (net) | 585,000.00 | 500,000.00 |
7 | Inventories | 420,000.00 | 380,000.00 |
8 | Prepaid expenses | 108,000.00 | 20,000.00 |
9 | Total current assets | $2,464,000.00 | $2,270,000.00 |
10 | Long-term investments | 800,000.00 | 800,000.00 |
11 | Property, plant, and equipment (net) | 5,760,000.00 | 5,184,000.00 |
12 | Total assets | $9,024,000.00 | $8,254,000.00 |
13 | Liabilities |
|
|
14 | Current liabilities | $880,000.00 | $800,000.00 |
15 | Long-term liabilities: |
|
|
16 | Mortgage note payable, 6%, | $200,000.00 | $0.00 |
17 | Bonds payable, 4%, | 3,000,000.00 | 3,000,000.00 |
18 | Total long-term liabilities | $3,200,000.00 | $3,000,000.00 |
19 | Total liabilities | $4,080,000.00 | $3,800,000.00 |
20 | Stockholders Equity |
|
|
21 | Preferred 4% stock, $5 par | $250,000.00 | $250,000.00 |
22 | Common stock, $5 par | 500,000.00 | 500,000.00 |
23 | Retained earnings | 4,194,000.00 | 3,704,000.00 |
24 | Total stockholders equity | $4,944,000.00 | $4,454,000.00 |
25 | Total liabilities and stockholders equity | $9,024,000.00 | $8,254,000.00 |
Determine the following measures for 20Y2 (round to one decimal place, including percentages, except for per-share amounts):
1. Working Capital | $ |
2. Current ratio | |
3. Quick ratio | |
4. Accounts receivable turnover | |
5. Number of days' sales in receivables | |
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 | $ |
16. Price-earnings ratio | |
17. Dividends per share of common stock | $ |
18. Dividend yield | % |
Points:
9 / 18
Feedback
Check My Work
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 are 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, excluding long-term investments. 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. |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started