Question

Measures of liquidity,  Solvency and  Profitability

The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall Inc. common stock was $ 68 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			$ 1,407,900		$ 1,190,000
Net income			330,000		243,700
Total			$ 1,737,900		$ 1,433,700
Dividends
	On preferred stock		$ 10,500		$ 10,500
	On common stock		15,300		15,300
		Total dividends	$ 25,800		$ 25,800
Retained earnings, December 31			$ 1,712,100		$ 1,407,900

Marshall Inc.
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
	20Y2		20Y1
Sales	$ 2,107,875		$ 1,942,050
Cost of goods sold	715,400		658,170
Gross profit	$ 1,392,475		$ 1,283,880
Selling expenses	$ 477,480		$ 592,690
Administrative expenses	406,745		348,090
Total operating expenses	884,225		940,780
Income from operations	$ 508,250		$ 343,100
Other income	26,750		21,900
	$ 535,000		$ 365,000
Other expense (interest)	160,000		88,000
Income before income tax	$ 375,000		$ 277,000
Income tax expense	45,000		33,300
Net income	$ 330,000		$ 243,700

Marshall Inc.
Comparative Balance Sheet
December 31, 20Y2 and 20Y1
			Dec. 31, 20Y2		Dec. 31, 20Y1
Assets
Current assets
	Cash		$ 441,480		$ 339,860
	Marketable securities		668,190		563,210
	Accounts receivable (net)		394,200		372,300
	Inventories		292,000		219,000
	Prepaid expenses		83,522		67,970
		Total current assets	$ 1,879,392		$ 1,562,340
Long-term investments			860,018		268,250
Property, plant, and equipment (net)			2,200,000		1,980,000
Total assets			$ 4,939,410		$ 3,810,590
Liabilities
Current liabilities			$ 587,310		$ 662,690
Long-term liabilities
	Mortgage note payable, 8 %		$ 900,000		$ 0
	Bonds payable, 8 %		1,100,000		1,100,000
		Total long-term liabilities	$ 2,000,000		$ 1,100,000
Total liabilities			$ 2,587,310		$ 1,762,690
Stockholders' Equity
Preferred $ 0.70 stock, $ 20 par			$ 300,000		$ 300,000
Common stock, $ 10 par			340,000		340,000
Retained earnings			1,712,100		1,407,900
	Total stockholders' equity		$ 2,352,100		$ 2,047,900
Total liabilities and stockholders' equity			$ 4,939,410		$ 3,810,590

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		%

Answer 1

1)	Working Capital   = Current Assets - Current Liabilities
	= $1879392-587310
	$          12,92,082
2)	Current Ratio = Current Assets / Current Liabilities
	= $1879392/587310
	=3.2 times
3)	Quick Ratio = Quick Assets / Current Liabilities
	= $1503870/587310
	=2.6 times
4)	Average Account Receivables = (beginning Account Receivables + ending Account Receivables)/2
	= ( $394200+372300)/2
	= $ 383250
	Account Receivables Turnover Ratio = Sales / average Account Receivables
	= $2107875/383250
	=5.5 times
5)	Number of days' sales in receivables = 365/ Account Receivables turnover ratio
	= 365 days /5.5
	=66.4days
6)	Average Inventory = (beginning inventory + ending inventory)/2
	= ( $219000+292000)/2
	= $ 255500
	Inventory Turnover Ratio = Cost of goods sold / average inventory
	= $715400/255500
	=2.8 times
7)	Days sales in inventory = 365/ inventory turnover ratio
	= 365 days /2.8
	=130.4 days
8)	Ratio of fixed assets to long-term liabilities
	=total fixed assets / total long term liabilities
	=2,200,000/2,000,000
	=1.1 times
Note: As HOMEWORKLIB RULES's policy, in the case of subquestions, the expert are bond to solve first subquesions only.