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 $ 58 on December 31, 20Y2. Marshall Inc. 2011 Comparative Retained Earnings Statement For the Years Ended December 31, 20Y2 and 2041 2012 Retained earnings, January 1 $3,625,150 Net income 817,600 Total $4,442,750 $3,081,850 631,200 $3,713,050 Dividends: On preferred stock $10,500 77,400 $10,500 77,400 On common stock Total dividends $87,900 $87,900 $4,354,850 Retained earnings, December 31 $3,625,150 Marshall Inc. Comparative Income Statement For the Years Ended December 31, 20Y2 and 2041 2012 2011 $5,825,400 $5,367,270 Sales Cost of goods sold Gross profit 1,839,600 1,692,430 $3,985,800 $3,674,840 Selling expenses Administrative expenses Total operating expenses Income from operations $1,760,260 1,033,800 $2,794,060 $1,470,510 1,252,650 $2,723,160 $1,262,640 66,460 $1,329,100 $880,780 Other revenue 56,220 $937,000

Answer 1

Accounts Receivables Turnover

Accounts Receivables Turnover = Sales / Average Accounts Receivables

= $5,825,400 / [($1,000,100 + $941,700)/2]

= $5,825,400 / $970,900

= 6.0 Times

Number of days sales in receivables

Number of days sales in receivables = 365 Days / Accounts Receivables Turnover

= 365 Days / 6.0 Times

= 60.8 Days

Inventory Turnover

Inventory Turnover = Cost of goods sold / Average Inventory

= $1,839,600 / [($744,600 + $569,400)/2]

= $1,839,600 / $657,000

= 2.8 Times

Number of days sales in Inventory

Number of days sales in Inventory = 365 Days / Inventory Turnover

= 365 Days / 2.8 Times

= 130.4 Days