In: Accounting
The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was $82.80 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 |
$3,692,000.00 |
$3,262,000.00 |
3 |
Net income |
610,000.00 |
540,000.00 |
4 |
Total |
$4,302,000.00 |
$3,802,000.00 |
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 |
$4,192,000.00 |
$3,692,000.00 |
Marshall Inc. |
Comparative Income Statement |
For the Years Ended December 31, 20Y2 and 20Y1 |
1 |
20Y2 |
20Y1 |
|
2 |
Sales |
$10,860,000.00 |
$10,000,000.00 |
3 |
Cost of goods sold |
6,000,000.00 |
5,460,000.00 |
4 |
Gross profit |
$4,860,000.00 |
$4,540,000.00 |
5 |
Selling expenses |
$2,160,000.00 |
$2,000,000.00 |
6 |
Administrative expenses |
1,627,500.00 |
1,500,000.00 |
7 |
Total operating expenses |
$3,787,500.00 |
$3,500,000.00 |
8 |
Income from operations |
$1,072,500.00 |
$1,040,000.00 |
9 |
Other revenue |
99,500.00 |
20,000.00 |
10 |
$1,172,000.00 |
$1,060,000.00 |
|
11 |
Other expense (interest) |
132,000.00 |
120,000.00 |
12 |
Income before income tax |
$1,040,000.00 |
$940,000.00 |
13 |
Income tax expense |
430,000.00 |
400,000.00 |
14 |
Net income |
$610,000.00 |
$540,000.00 |
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) |
584,000.00 |
500,000.00 |
7 |
Inventories |
430,000.00 |
380,000.00 |
8 |
Prepaid expenses |
109,000.00 |
20,000.00 |
9 |
Total current assets |
$2,474,000.00 |
$2,270,000.00 |
10 |
Long-term investments |
800,000.00 |
800,000.00 |
11 |
Property, plant, and equipment (net) |
5,750,000.00 |
5,184,000.00 |
12 |
Total assets |
$9,024,000.00 |
$8,254,000.00 |
13 |
Liabilities |
||
14 |
Current liabilities |
$882,000.00 |
$812,000.00 |
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 |
$4,082,000.00 |
$3,812,000.00 |
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 |
4,192,000.00 |
3,692,000.00 |
24 |
Total stockholders’ equity |
$4,942,000.00 |
$4,442,000.00 |
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): Assume a 365-day year.
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 |
Questions
Shaded cells have feedback.
Determine the following measures for 20Y2 (round to one decimal place, including percentages, except for per-share amounts): Assume a 365-day year.
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 | % |
Answer: | The following ratios are for 20Y2 | |
1 | Working Capital | =Current Asset - Current Liabilities |
=$2474,000-882,000 | ||
$ 15,92,000 | ||
2 | Current Ratio | Current Assel/Current Liabilities |
=2,474,000/882,000 | ||
2.80 | ||
3 | Quick Ratio | =(Current Asset-Inventories-Prepaid Expenses) |
=(2,474,000-430,000-109,000)/882,000 | ||
2.19 | ||
4 | Accounts Receivable ratio | =Sales/Average accounts receivable |
=10,860,000/((584000+500000)/2) | ||
20.04 |