Question

Measures of liquidity, Solvency and Profitability The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall Inc. common st Marshall Inc. Comparative Retained Earnings Statement For the Years Ended December 31, 20Y2 and 20Y1 20Y1 20Y2 $3,069,350 $ 2,579,650 Retained earnings, January 1 720,000 528,400 Net income 3,789,350 $3,108,050 Total Dividends On preferred stock $9,100 $9,100 29,600 29,600 On common stock Total dividends 38,700 $38,700 Retained earnings, December 31 $ 3,750,650 $ 3,069,350 Marshall Inc. Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 20Y1 20Y2 $ 3,917,180 $4,251,520 Sales 1,335,140 1,451,240 Cost of goods sold $2,582,040 $ 2,800,280 Gross profit $1,179,930 948,770 Selling expenses 692,970 808,220 Administrative expenses 1,872,900 1,756,990 Total operating expenses $709,140 $ 1,043,290 Income from operations 45,260 54,910 Other income $ 1,098,200 $ 754,400 154,400 280,000 Other expense (interest) 600,000 $818,200 Income before income tax 98,200 71,600 Income tax expense s720,000 $528,400 Net income Comparative Balance Sheet December 31, 20Y2 and 20Y1 Dec. 31, 20Y1 Dec. 31, 20Y2 Assets Current assets $699,480 s 787,110 Cash 1,159,140 Marketable securities 1,191,300 737,300 Accounts receivable (net) 781,100 452,600 584,000 Inventories 139,900 148,904 Prepaid expenses s 3,492,414 $3,188,420 Total current assets 2,074,821 808,205 Long-term investments 3,780,000 4,200,000 Property, plant, and equipment (net) $ 9,767,235 $7,776,625 Total assets Liabilities $1,126,585 $1,387,275 Current liabilities Long-term liabilities $1,570,000 Mortgage note payable, 8 % $ 0 1,930,000 1,930,000 Bonds payable, 8 % $3,500,000 Total long-term liabilities $1,930,000 Liabilities Current liabilities $1,126,585 s 1,387,275 Long-term liabilities Mortgage note payable, 8 % s 0 $1,570,000 Bonds payable, 8 % 1,930,000 1,930,000 Total long-term liabilities 3,500,000 $1,930,000 Total liabilities $4,626,585 $3,317,275 Stockholders' Equity Preferred $ 0.70 stock, $50 par s 650,000 650,000 Common stock, $ 10 par 740,000 740,000 Retained earnings 3,750,650 3,069,350 Total stockholders' equity $5,140,650 4,459,350 Total liabilities and stockholders' equity $9,767,235 7,776,625 Required: ing measures for 20Y2, rounding to one decimal place, except for dollar amounts, which sho requirement for subsequent requirement, if required. Assume 365 days a year. 1. Working capital 2,365,829 2. Current ratio 3.1 3. Quick ratio 2.4 V 2. Current ratio 3.1 3. Quick ratio 2.4 4. Accounts receivable turnover 5.6 v Number of days' sales in receivables 5. 65.2 days 6. Inventory turnover 2.8V Number of days' sales in inventory 7. 130.4 days Ratio of fixed assets to long-term liabilities 8. 1.2 Ratio of liabilities to stockholders' equity 9. 0.9 10. Times interest earned 11. Asset turnover 0.6 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

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10. Times Interest Earned
Net Operating Income (EBIT)	a	$ 1,098,200
Interst Expense	b	$     280,000
Times Interest Earned	a/b	3.92
12. Return on Total Assets
Net Income	a	$     720,000
Total Average Assets ($9,767,235+$7,776,625)/2	b	$ 8,771,930
	a/b	8.21%
13. Return on Stockholde Equity
Net Income	a	$     720,000
Average Equity ($5,140,650+$4,459,350)/2	b	$ 4,800,000
	a/b	15.00%
14. Return on Common Stockholder's Equity
Net Income	a	$     720,000
Average Common Equity	b	$ 4,150,000
	a/b	17.35%
	Year 2	Year 1	Average
Common Stock	$   740,000	$     740,000
Retained Earning	$3,750,650	$ 3,069,350
Total	$4,490,650	$ 3,809,350	$4,150,000
15. Earning per share on Common Stock
Net Income available for Common Stockholders ($720,000-$9,100	a	$     710,900
No of Shares outstanding	b	74,000
	a/b	$            9.61
16. Price Earning Ratio
Earning per Share	a	$            9.61
Market Price	b	Not Given
	b/a	#VALUE!
17. Dividend per share of Common Stock
Dividend on Common Stock	a	$       29,600
No of Shares outstanding	b	74,000
	a/b	$            0.40
18. Dividend Yield
Annual Dividend	a	$       29,600
Market Price of Stock	b	Not Given
	b/a	#VALUE!