Marigold Corporation was formed 5 years ago through a public subscription of common stock. Daniel Brown,...
Marigold Corporation was formed 5 years ago through a public
subscription of common stock. Daniel Brown, who owns 15% of the
common stock, was one of the organizers of Marigold and is its
current president. The company has been successful, but it
currently is experiencing a shortage of funds. On June 10, 2021,
Daniel Brown approached the Topeka National Bank, asking for a
24-month extension on two $35,020 notes, which are due on June 30,
2021, and September 30, 2021. Another note of $6,040 is due on
March 31, 2022, but he expects no difficulty in paying this note on
its due date. Brown explained that Marigold’s cash flow problems
are due primarily to the company’s desire to finance a $302,480
plant expansion over the next 2 fiscal years through internally
generated funds.
The commercial loan officer of Topeka National Bank requested the
following financial reports for the last 2 fiscal years.
|
Marigold Corporation |
||||
|---|---|---|---|---|
| Assets |
2021 |
2020 |
||
|
Cash |
$18,370 | $12,530 | ||
|
Notes receivable |
148,910 | 132,190 | ||
|
Accounts receivable (net) |
131,240 | 125,020 | ||
|
Inventories (at cost) |
105,170 | 50,210 | ||
|
Plant & equipment (net of depreciation) |
1,447,150 | 1,413,460 | ||
|
Total assets |
$1,850,840 | $1,733,410 | ||
| Liabilities and Owners’ Equity | ||||
|
Accounts payable |
$78,640 | $91,420 | ||
|
Notes payable |
76,080 | 61,660 | ||
|
Accrued liabilities |
8,810 | 8,340 | ||
|
Common stock (130,000 shares, $10 par) |
1,310,790 | 1,300,030 | ||
|
Retained earningsa |
376,520 | 271,960 | ||
|
Total liabilities and stockholders’ equity |
$1,850,840 | $1,733,410 | ||
| aCash dividends were paid at the rate of $1 per share in fiscal year 2020 and $2 per share in fiscal year 2021. | ||||
|
Marigold Corporation |
||||
|---|---|---|---|---|
|
2021 |
2020 |
|||
|
Sales revenue |
$3,001,980 | $2,700,330 | ||
|
Cost of goods solda |
1,538,400 | 1,427,160 | ||
|
Gross margin |
1,463,580 | 1,273,170 | ||
|
Operating expenses |
864,890 | 787,400 | ||
|
Income before income taxes |
598,690 | 485,770 | ||
|
Income taxes (40%) |
239,476 | 194,308 | ||
|
Net income |
$359,214 | $291,462 | ||
| aDepreciation charges on the plant and equipment of $100,330 and $101,800 for fiscal years ended March 31, 2020 and 2021, respectively, are included in cost of goods sold. | ||||
(a)
Compute the following items for Marigold Corporation.
(Round answers to 2 decimal places, e.g. 2.25 or
2.25%.)
| 1. | Current ratio for fiscal years 2020 and 2021. | |
|---|---|---|
| 2. | Acid-test (quick) ratio for fiscal years 2020 and 2021. | |
| 3. | Inventory turnover for fiscal year 2021. | |
| 4. | Return on assets for fiscal years 2020 and 2021. (Assume total assets were $1,694,120 at 3/31/19.) | |
| 5. | Percentage change in sales, cost of goods sold, gross margin, and net income after taxes from fiscal year 2020 to 2021. |
|
2020 |
2021 |
|||||||
|---|---|---|---|---|---|---|---|---|
| 1. |
Current ratio |
enter the ratio rounded to 2
decimal places
|
:1 | enter the ratio rounded to 2
decimal places
|
:1 | |||
| 2. |
Acid-test (quick) ratio |
enter the ratio rounded to 2
decimal places
|
:1 | enter the ratio rounded to 2
decimal places
|
:1 | |||
| 3. |
Inventory turnover |
enter the inventory turnover
rounded to 2 decimal places
|
times | |||||
| 4. |
Return on assets |
enter the return on assets in
percentages rounded to 2 decimal places
|
% | enter the return on assets in
percentages rounded to 2 decimal places
|
% | |||
| 5. |
Percent Changes |
Percent Increase |
|||
|---|---|---|---|---|---|
|
Sales revenue |
enter percentages rounded to
2 decimal places
|
% | |||
|
Cost of goods sold |
enter percentages rounded to
2 decimal places
|
% | |||
|
Gross margin |
enter percentages rounded to
2 decimal places
|
% | |||
|
Net income after taxes |
enter percentages rounded to
2 decimal places
|
% | |||
Homework Answers
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Marigold Corporation was formed 5 years ago through a public
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Condensed balance sheet and income statement data for Ayayai
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2021
2020
Cash
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Accounts receivable (net)
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46,000
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Other current assets
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97,000
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Investments
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72,000
47,000
Plant and equipment (net)
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370,000
358,000
$731,000
$606,000
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