Question

The financial statements of Marigold Company appear below:

MARIGOLD COMPANY Comparative Balance Sheet December 31
		2022		2021
Assets
Cash		$ 27,000		$ 39,400
Debt investments		21,300		53,000
Accounts receivable (net)		51,600		27,900
Inventory		154,000		169,000
Property, plant and equipment (net)		177,000		163,000
Total assets		$430,900		$452,300
Liabilities and stockholders' equity
Accounts payable		$ 26,400		$ 27,200
Short-term notes payable		32,900		92,900
Bonds payable		67,700		146,800
Common stock		195,900		101,200
Retained earnings		108,000		84,200
Total liabilities and stockholders' equity		$430,900		$452,300

MARIGOLD COMPANY Income Statement For the Year Ended December 31, 2022
Net sales (all on credit)					$415,000
Cost of goods sold					165,000
Gross profit					250,000
Expenses
	Interest expense		$11,600
	Selling expenses		34,000
	Administrative expenses		19,000
	Total expenses				64,600
Income before income taxes					185,400
Income tax expense					33,100
Net income					$ 152,300

Additional information:

a.		Cash dividends of $53,600 were declared and paid on common stock in 2022.
b.		Weighted-average number of shares of common stock outstanding during 2022 was 53,600 shares.
c.		Market price of common stock on December 31, 2022, was $14 per share.
d.		Net cash provided by operating activities for 2022 was $71,700.

Using the financial statements and additional information, compute the following ratios for the Marigold Company for 2022. (Round all answers to 2 decimal places, e.g. 1.83 or 12.61%.)

1.		Current ratio		Enter current ratio value	: 1
2.		Return on common stockholders' equity		Enter return on common stockholders' equity in percentages	%
3.		Price-earnings ratio		Enter price-earnings ratio in times	times
4.		Inventory turnover		Enter inventory turnover in times	times
5.		Accounts receivable turnover		Enter accounts receivable turnover in times	times
6.		Times interest earned		Enter times interest earned	times
7.		Profit margin		Enter profit margin in percentages	%
8.		Average days in inventory		Enter average days in inventory	days
9.		Payout ratio		Enter payout ratio in percentages	%
10.		Return on assets		Enter return on assets in percentages	%

Answer 1

1) Current assets= $27000+21300+51600+154000= $253900

Current liabilities= $26400+32900= $59300

Current ratio= Current assets/Current liabilities

= $253900/59300= 4.28

2) Average common stockholders' equity= ($195900+108000+101200+84200)/2= $244650

Return on common stockholders' equity= (Net income-Preferred dividend)/Average common stockholders' equity

= ($152300-0)/244650= 62.25%

3) Earnings per share= Net income/Weighted average number of shares outstanding

= $152300/53600= $2.84

Price-earnings ratio= Market price per share/Earnings per share

= $14/2.84= 4.93

4) Average inventory= ($154000+169000)/2= $161500

Inventory turnover= Cost of goods sold/Average inventory

= $165000/161500= 1.02

5) Average accounts receivable= ($51600+27900)/2= $39750

Accounts receivable turnover= Net sales/Average accounts receivable

= $415000/39750= 10.44

6) Times interest earned ratio= Earnings before income tax and interest/Interest expense

= ($152300+33100+11600)/11600= 16.98

7) Profit margin= Net income*100/Net sales

= $152300*100/415000= 36.70%

8) Average days in inventory= 365 days/Inventory turnover

= 365/1.02= 357.84 days

9) Payout ratio= Total dividends/Net income

= $53600*100/152300= 35.19%

10) Average total assets= ($430900+452300)/2= $441600

Return on assets= Net income/Average total assets

= $152300*100/441600= 34.49%

1.		Current ratio		4.28	: 1
2.		Return on common stockholders' equity		62.25	%
3.		Price-earnings ratio		4.93	times
4.		Inventory turnover		1.02	times
5.		Accounts receivable turnover		10.44	times
6.		Times interest earned		16.98	times
7.		Profit margin		36.70	%
8.		Average days in inventory		357.84	days
9.		Payout ratio		35.19	%
10.		Return on assets		34.49	%

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