Question

Measures of liquidity, Solvency, and Profitability The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was $ 63 on December 31, 2012. Marshall Inc. Comparative Retained Earnings Statement For the Years Ended December 31, 20Y2 and 20Y1 Retained earnings, January 1 Net income 2012 $1,315,800 280,000 $1,595,800 2011 $1,118,300 229,100 $1,347,400 Total Dividends: $9,100 22,500 On preferred stock On common stock Total dividends Retained earnings, December 31 $9,100 22,500 $31,600 $1,564,200 $31,600 $1,315,800 Marshall Inc. Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 20Y1 Sales $1,552,620 2012 $1,685,205 613,200 $1,072,005 564,140 Cost of goods sold Gross profit Selling expenses Administrative expenses $362,290 5988,480 5434,660 255,280 308,625 5689,940 Total operating expenses Income from operations Other revenue 5670,915 $401,090 21,110 5298,540 19,060 Other expense interest) Income before income tax Income tax expense S422,200 104,000 $318,200 38,200 $317,600 57,600 $260,000 30,900 Net income $280,000 $229,100

Answer 1

Working capital = Current assets - Current Liabilities = 1,317,888 - 399,360 = 918,528

Current Ratio = Current assets/Current liabilities = 1,317,888/399,360 = 3.3

Quick Ratio = Quick assets /Current liabilities = (1,317,888-233,600-54,438)/399,360 = 2.6

Accounts Receivable Turnover = Sales/Average accounts receivables = 1,685,205/[(306,600+284,700)/2][ = 1,685,205/295,650 = 5.7