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1. A company reports the following: Income before income tax expense $6,000,000 Interest expense 300,000 Determine...

1. A company reports the following:

Income before income tax expense $6,000,000
Interest expense 300,000

Determine the times interest earned ratio.

2. A company reports the following:

Sales $6,480,000
Average total assets 2,400,000

Determine the asset turnover ratio. Round your answer to one decimal place.

3. A company reports the following income statement and balance sheet information for the current year:

Net income $110,000
Interest expense 77,000
Average total assets 1,700,000

Determine the return on total assets. Round percentage to one decimal place.
%

4. A company reports the following:

Net income $750,000
Preferred dividends 150,000
Average stockholders' equity 5,000,000
Average common stockholders' equity 3,750,000

Determine (a) the return on stockholders’ equity and (b) the return on common stockholders’ equity.

a. The Return on Stockholders’ Equity %
b. The Return on Common Stockholders’ Equity %

5. A company reports the following:

Net income $460,000
Preferred dividends $40,000
Shares of common stock outstanding 150,000
Market price per share of common stock $40.60

a. Determine the company's earnings per share on common stock. Round your answer to two decimal places. Use the rounded answer of requirement a for subsequent requirement, if required.
$

b. Determine the company's price-earnings ratio. Round your answer to one decimal place.

6. 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
20Y2 20Y1
Retained earnings, January 1 $3,704,000 $3,264,000
Net income 600,000 550,000
Dividends:
    On preferred stock (10,000) (10,000)
    On common stock (100,000) (100,000)
Retained earnings, December 31 $4,194,000 $3,704,000
Marshall Inc.
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
20Y2 20Y1
Sales $10,850,000 $10,000,000
Cost of merchandise sold 6,000,000 5,450,000
Gross profit $4,850,000 $4,550,000
Selling expenses $2,170,000 $2,000,000
Administrative expenses 1,627,500 1,500,000
Total operating expenses $3,797,500 $3,500,000
Income from operations $1,052,500 $1,050,000
Other revenue and expense:
    Other revenue 99,500 20,000
    Other expense (interest) (132,000) (120,000)
Income before income tax expense $1,020,000 $950,000
Income tax expense 420,000 400,000
Net income $600,000 $550,000


Marshall Inc.
Comparative Balance Sheet
December 31, 20Y2 and 20Y1
20Y2 20Y1
Assets
Current assets:
     Cash $1,050,000 $ 950,000
     Marketable securities 301,000 420,000
     Accounts receivable (net) 585,000 500,000
     Inventories 420,000 380,000
     Prepaid expenses 108,000 20,000
             Total current assets $2,464,000 $2,270,000
Long-term investments 800,000 800,000
Property, plant, and equipment (net) 5,760,000 5,184,000
Total assets $9,024,000 $8,254,000
Liabilities
Current liabilities $880,000 $800,000
Long-term liabilities:
     Mortgage note payable, 6% $200,000 $0
     Bonds payable, 4% 3,000,000 $3,000,000
             Total long-term liabilities $3,200,000 $3,000,000
Total liabilities $4,080,000 $3,800,000
Stockholders' Equity
Preferred 4% stock, $5 par $250,000 $250,000
Common stock, $5 par 500,000 500,000
Retained earnings 4,194,000 3,704,000
Total stockholders' equity $4,944,000 $4,454,000
Total liabilities and stockholders' equity $9,024,000 $8,254,000

Required:

Determine the following measures for 20Y2, rounding to one decimal place, except 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.

1. Working capital $           
2. Current ratio            
3. Quick ratio            
4. Accounts receivable turnover            
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            
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 %        

Solutions

Expert Solution

ekkarill92 answered 2 years ago
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