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 $ 55 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			$ 1,935,800		$ 1,641,200
Net income			450,000		336,200
Total			$ 2,385,800		$ 1,977,400
Dividends
	On preferred stock		$ 14,000		$ 14,000
	On common stock		27,600		27,600
		Total dividends	$ 41,600		$ 41,600
Retained earnings, December 31			$ 2,344,200		$ 1,935,800

Marshall Inc.
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
	20Y2		20Y1
Sales	$ 2,467,400		$ 2,273,380
Cost of goods sold	931,480		856,960
Gross profit	$ 1,535,920		$ 1,416,420
Selling expenses	$ 476,760		$ 608,800
Administrative expenses	406,130		357,550
Total operating expenses	882,890		966,350
Income from operations	$ 653,030		$ 450,070
Other income	34,370		28,730
	$ 687,400		$ 478,800
Other expense (interest)	176,000		96,800
Income before income tax	$ 511,400		$ 382,000
Income tax expense	61,400		45,800
Net income	$ 450,000		$ 336,200

Marshall Inc.
Comparative Balance Sheet
December 31, 20Y2 and 20Y1
			Dec. 31, 20Y2		Dec. 31, 20Y1
Assets
Current assets
	Cash		$ 417,680		$ 458,250
	Marketable securities		632,160		759,380
	Accounts receivable (net)		489,100		459,900
	Inventories		365,000		277,400
	Prepaid expenses		79,022		91,650
		Total current assets	$ 1,982,962		$ 2,046,580
Long-term investments			1,245,018		371,086
Property, plant, and equipment (net)			2,860,000		2,574,000
Total assets			$ 6,087,980		$ 4,991,666
Liabilities
Current liabilities			$ 683,780		$ 985,866
Long-term liabilities
	Mortgage note payable, 8 %		$ 990,000		$ 0
	Bonds payable, 8 %		1,210,000		1,210,000
		Total long-term liabilities	$ 2,200,000		$ 1,210,000
Total liabilities			$ 2,883,780		$ 2,195,866
Stockholders' Equity
Preferred $ 0.70 stock, $ 20 par			$ 400,000		$ 400,000
Common stock, $ 10 par			460,000		460,000
Retained earnings			2,344,200		1,935,800
	Total stockholders' equity		$ 3,204,200		$ 2,795,800
Total liabilities and stockholders' equity			$ 6,087,980		$ 4,991,666

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.

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

Answer 1

Answer to Question 5 and 6:

Answer to Question 7 and 8: