Question

The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was $82.60 on December 31, 20Y2.

Marshall Inc.

Comparative Retained Earnings Statement

For the Years Ended December 31, 20Y2 and 20Y1

1		20Y2	20Y1
2	Retained earnings, January 1	$3,704,000.00	$3,264,000.00
3	Net income	600,000.00	550,000.00
4	Total	$4,304,000.00	$3,814,000.00
5	Dividends:
6	On preferred stock	$10,000.00	$10,000.00
7	On common stock	100,000.00	100,000.00
8	Total dividends	$110,000.00	$110,000.00
9	Retained earnings, December 31	$4,194,000.00	$3,704,000.00

Marshall Inc.

Comparative Income Statement

For the Years Ended December 31, 20Y2 and 20Y1

1		20Y2	20Y1
2	Sales	$10,850,000.00	$10,000,000.00
3	Cost of goods sold	6,000,000.00	5,450,000.00
4	Gross profit	$4,850,000.00	$4,550,000.00
5	Selling expenses	$2,170,000.00	$2,000,000.00
6	Administrative expenses	1,627,500.00	1,500,000.00
7	Total operating expenses	$3,797,500.00	$3,500,000.00
8	Income from operations	$1,052,500.00	$1,050,000.00
9	Other revenue	99,500.00	20,000.00
10		$1,152,000.00	$1,070,000.00
11	Other expense (interest)	132,000.00	120,000.00
12	Income before income tax	$1,020,000.00	$950,000.00
13	Income tax expense	420,000.00	400,000.00
14	Net income	$600,000.00	$550,000.00

Marshall Inc.

Comparative Balance Sheet

December 31, 20Y2 and 20Y1

1		20Y2	20Y1
2	Assets
3	Current assets:
4	Cash	$1,050,000.00	$950,000.00
5	Marketable securities	301,000.00	420,000.00
6	Accounts receivable (net)	585,000.00	500,000.00
7	Inventories	420,000.00	380,000.00
8	Prepaid expenses	108,000.00	20,000.00
9	Total current assets	$2,464,000.00	$2,270,000.00
10	Long-term investments	800,000.00	800,000.00
11	Property, plant, and equipment (net)	5,760,000.00	5,184,000.00
12	Total assets	$9,024,000.00	$8,254,000.00
13	Liabilities
14	Current liabilities	$880,000.00	$800,000.00
15	Long-term liabilities:
16	Mortgage note payable, 6%,	$200,000.00	$0.00
17	Bonds payable, 4%,	3,000,000.00	3,000,000.00
18	Total long-term liabilities	$3,200,000.00	$3,000,000.00
19	Total liabilities	$4,080,000.00	$3,800,000.00
20	Stockholders’ Equity
21	Preferred 4% stock, $5 par	$250,000.00	$250,000.00
22	Common stock, $5 par	500,000.00	500,000.00
23	Retained earnings	4,194,000.00	3,704,000.00
24	Total stockholders’ equity	$4,944,000.00	$4,454,000.00
25	Total liabilities and stockholders’ equity	$9,024,000.00	$8,254,000.00

Determine the following measures for 20Y2 (round to one decimal place, including percentages, except for per-share amounts):

1.	Working capital
2.	Current ratio
3.	Quick ratio
4.	Accounts receivable turnover
5.	Number of days’ sales in receivables
6.	Inventory turnover
7.	Number of days’ sales in inventory
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

Determine the following measures for 20Y2 (round to one decimal place, including percentages, except for per-share amounts):

1. Working Capital	$
2. Current ratio
3. Quick ratio
4. Accounts receivable turnover
5. Number of days' sales in receivables
6. Inventory turnover
7. Number of days’ sales in inventory
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	%

I have the answer to everything except (12. Return on total assets)

I found several answers on here for #12 (12.76, 13.33, 6.9, 6.65, 834, 11.5; none of these are correct)

Please helpme find the correct answer

Answer 1

Answer :-

1. Working Capital = Total Current Assets- Total Current Liabilities

Working Capital = $2,464,000 - $880,000 = $1,584,000

2. Current Ratio = Total Current Assets / Total Current Liabilities

Current Ratio = $2,464,000 / $880,000 = 2.8

3. Quick Ratio = Quick assets/ Current Liabilities

Quick Ratio = $2,464,000-$108,000-$420,000/ $880,000 = 2.2

4. Accounts Receivable Turnover = Net credit sales/ Average Accounts Receivable

Accounts Receivable Turnover = $10,850,000/($585,000+$500,000)/2 = 20

5. No. Of days' sales in receivable = 365 / 20 = 18.25 days

6. Inventory Turnover = Cost of goods sold/ Average Inventory

Inventory Turnover = $6,000,000/($420,000+$380,000)/2 = 15

7. No. Of days' sales in Inventory = 365 / 15 = 24.33 days

8. Ratio of Fixed assets to Long term Liabilities = Fixed assets / Long term Liabilities

Ratio of Fixed assets to long term Liabilities = $5,760,000/$3,200,000 = 1.8

9. Ratio of Liabilities to stockholders' equity = Liabilities / Total stockholders' equity

Ratio of Liabilities to stockholders' equity = $4,080,000 / $4,944,000 = 0.82 or 0.83

10. Times interest earned = EBIT / Interest expense

Times interest earned = $1,152,000/$132,000 = 8.72

11. Assets Turnover = Net Sales / Average total assets

Assets Turnover = $10,850,000/($9,024,000+$8,254,000)/2 = 1.25

12. Return on total assets = Income from operations/Average total assets

Return on total assets = $1,052,500 /($9,024,000+$8,254,000)/2 = 12.18%

13. Return on stockholders' equity = Net income / Average stockholders equity

Return on stockholders' equity = $600,000/($4,944,000+$4,454,000)/2 = 12.77%

14. Return on common stockholders equity = Net Income - Preferred dividend/ Average common stockholders equity

Return on common stockholders' equity = $600,000-$10,000/($500,000+$500,000+$4,194,000+$3,704,000)/2 = 13.26%

15. Earnings per share on common stock = Net income - Preferred dividend/No. Of outstanding common share

Earnings per share on common stock = $600,000-$10,000/($500,000+$500,000)/$5/2 = $5.9

16. Price earning Ratio = MPS / EPS

Price earning Ratio = $82.60 / $5.9 = 14

17. Dividend per share on common stock = $100,000/100,000 = $1

18. Dividend yield = DPS / MPS

Dividend yield = $1/ $82.60 = 1.21%

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