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 $ 62 on December 31, 2012. Marshall Inc. Comparative Retained Earnings Statement For the Years Ended December 31, 2012 and 2011 2012 2011 Retained earnings, January 1 $1,569,900 $1,328,700 Net Income 331,200 272,200 Dividends: On preferred stock (11,200) く On common stock (11,200) (19,800) $1,870,100 (19,800) Retained earnings, December 31 $1,569,900 Marshall Inc. Comparative Income Statement For the Years Ended December 31, 20Y2 and 2041 2012 2011 Sales $1,939,760 $2,105,320 740,950 Cost of merchandise sold 681,670 $1,258,090 Gross profit $1,364,370 Selling expenses $473,900 $565,070

Answer 1

1. Working lapital $1368707 Notes: Current liabilities working capital : Current Asset Worteing Capital for 2012- #1963 797 $ 595090 $1368701 lurrent Ratio 3.3 Notest lument Ratio : Current Asset Current liabilities Current Ratio for 2012 = $1963797 $ 59sogo = 3.3 3 2.7 Quick ratio Notes: Quick ratio = Cash + Receivable thaukelable Securities Current liabilities Quille ratio for 2042 = $475410+ $ 79540 + $386900 2.658 $595ogo Quick Ratio for 2012 2.70 in Duick ratio we talle most liquid assets, so Inventories and Pue paid expenses are excluded because these are not convented to liquid assets quickly. 4. Accounts Receivable turnoven 5.6 Notes Account Receivable to movey = Net Credit sales Avevage account Receivable Average account Receivable (beginning Receivable + Ending receivable) 2 -

Number of days sales in receivable Avevouge account Receivable * 36 5000 + $ 386900) = $375950 2 9042 $375 950 5 Account Receivable to moven for $ 210 5320 = 5.6 tongs Notes 65.21 I days Number of days sales in receivable Accounts Receivable Average x Number of days "Total Credit Soler $375950 $ 210 5320 x 365 days = 65.178 days Number of days sales in receivable for 2012 = 6. Inventory 2.9 les 65.2 days turnov eu Notes: Inventory turno veu Cost of goods sold Average Inventory Average Inventory = (Beginning Inventory + Ending Inventory) Average Inventory ($ 219000 + $ 292000) $ 255 500 In ventory turno veu for 2012 = 2 $ 740950/ $ 255 500 = 2:9 7. Notes: 125.9 days Number of days sales in Inven- ventory Number of days sales in inventory - Besogue Number of days in Period Inventory tumover 365 days Number of days sales in inventory for 2012 - = 125.862 days 219 Number of days sales in 1ne In ventory 12559 days Ratio of fixed assets to long liabilities fixed Assets (net) 8. - teum Notes: 1:3 Ratio of fixed assets to lon- teum liabilities 2.0 Total long teum liabilities: 22

2210000 9:13 9. Ratio of 0.9 Times in teuest eauned / Net In Come + Fixed Assets Property Plane equit men iwel) Ratio of fixed Musell to long term liabilities : $ 2210 000 $ 1700 000 Ratio of fixed Assets to long team liabilities for 2012 = 13 liabilities to sto che holden's Equity Notes ! Ratio of liabilities to sto cu holder Equity = _Total lia bi li tiles potel Sto (le holder's Equity Ratio of liabilities to stocle holdes Equity ? $ 2295090 $ 2550 100 Patio of liabilities to sto zu holder Equt ty for 2042 50.9 3.8 In ( me Ta x + Interest Expense) Inteyest Expense = (4 331200 + $45200 + $ 136000) $ $12400 $.136000 $ 136000 3.7676 Times in teuest earned for 2012 = 3.8 = 0.go 10. Times in teuesteamed Notes 11 Asset Turnoven 008 0.5 Note 25 90 Asset tumovey = Net sales Average Total Assets Average to tel Assets = (Beginning Assets + Endring assets) 2 ($.4845190 cm $ 3497667) $4171428.5 2 Asset tumoren $2105 320 $ 4771428.50 O. Soy Asset tumo ven for 2012 ar o.s.

Return . on total Assets Notes Retum on total Assets 7.9 Net Income total Assets Average Average total Assels = $4171428.50 Retum on total Asset - X100 $ 419 428.50 be wunded off. $ 8 331200 7.939.1. 10. 7.9.1. * figures may 13 Return on s toch holden's Equity 12.9 1.1 Notes : Return on stockholdey's Equity Net Income To tal s to du holder Equity $ $331200 $ 2550100 X100 12:98 F 1. 12:987.1. ie. 12.9 1. Return on stockholders Equity * You can take 12.9871. as 13% also. It is due to calculation key approximatiom. 14. Return on common stock holder's equity 15.4 %. Notes Reteen on Common stock holder's Equity = Net Income - Preferred Stork Dividend la morte wat soort van Average common stockholder's Average common shekhe thule epuis longing the elde equity t Ending Equity het ek Stockholder's Equity ($ 360.000 +$ 1870100+ $360000 + $1569900) 2 gerens 2 $ 2080 000 common stock + Retained Earnings Common Stoele holder's Equity

Avevage Common Stoces widler Equity = $331200 - $112.00 X700 $ 2080 000 $ 320000 XID - 15:3841 $ 2080 000 Avellage Common Stoele holdlen's Equity for 2042 = 15:47 15. Earning key shave on common stock $ 8.9 Notes Eanning bed share on Common stoc Corning avai ble for common Number of shares outstanding Earning availble for common = Net Income - Preferred Dividend S to Wholder stolu hololey Number of shawes outstanding $ 331200 - $11200 = $ 320000 $ 360000 10 36000 showe Earning per shave in Eauning beu share on common stocle for 20 y2 = Common stock = $320000 36000 = $8.88 peu shave $8.9 pey shave 16. Price - Eauning ratio Price - Earning ratio Mauliet brice per shave Earning price per shave Mauket brice -- Common stock value & Retained Eauning $360000 +$ 1870100 $ 22 30100 Market price per shave را وارد این $ 2230100 36000 share $61.947 her share neapistoobede $ 61.947 $8.888 6.969 i.e. 7. Price fauning rachio = zostolad af oot2 none

since, Hauket brice of shave is not given, assume boole value of and Cummun stoele equal to mau ket price. retained earning 17. Dividend per Shave of Common Stock Notes: $0.6 Common stock Dividend peu share of Common stock - Number of shares outstanding $ 19800 $0.55 per share. or $0.6 þer share 36000 shave Dividend on . Dividend beu share of common stock for 2012 = $0.55 peu shave Dividend beu shave is higheu a rounding off wit can be $0.5 or $0:6, as the correct tri is $0.55 amount 18. Dividend Yield ol. Dividend Yield Dividend Peu shave Hauliet pr^ce pee share X100 . $0.55 $ 61.947 X100 0.887.1. Dividend Yield for 2012 = 1).