Question

Please show all workings

Measures of liquidity, Solvency and Profitability

The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was $ 51 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			$ 3,227,150		$ 2,740,250
Net income			700,000		561,200
Total			$3,927,150		$ 3,301,450
Dividends:
	On preferred stock		$ 11,900		$ 11,900
	On common stock		62,400		62,400
		Total dividends	$ 74,300		$ 74,300
Retained earnings, December 31			$ 3,852,850		$ 3,227,150

Marshall Inc.
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
	20Y2		20Y1
Sales	$ 4,708,500		$ 4,338,200
Cost of goods sold	1,545,410		1,421,780
Gross profit	$ 3,163,090		$ 2,916,420
Selling expenses	$ 1,152,240		$ 1,365,710
Administrative expenses	981,530		802,090
Total operating expenses	2,133,770		2,167,800
Income from operations	$ 1,029,320		$ 748,620
Other revenue	54,180		47,780
	$ 1,083,500		$ 796,400
Other expense (interest)	288,000		158,400
Income before income tax	$ 795,500		$ 638,000
Income tax expense	95,500		76,800
Net income	$ 700,000		$ 561,200

Marshall Inc.
Comparative Balance Sheet
December 31, 20Y2 and 20Y1
			Dec. 31, 20Y2		Dec. 31, 20Y1
Assets
Current assets
	Cash		$ 965,120		$ 676,770
	Marketable securities		1,460,720		1,121,510
	Accounts receivable (net)		810,300		759,200
	Inventories		598,600		467,200
	Prepaid expenses		182,581		135,350
		Total current assets	$ 4,017,321		$ 3,160,030
Long-term investments			2,117,094		983,357
Property, plant, and equipment (net)			3,960,000		3,564,000
Total assets			$ 10,094,415		$ 7,707,387
Liabilities
Current liabilities			$ 1,181,565		$ 1,040,237
Long-term liabilities
	Mortgage note payable, 8 %		$ 1,620,000		$ 0
	Bonds payable, 8 %		1,980,000		1,980,000
		Total long-term liabilities	$ 3,600,000		$ 1,980,000
Total liabilities			$ 4,781,565		$ 3,020,237
Stockholders' Equity
Preferred $ 0.70 stock, $ 40 par			$ 680,000		$ 680,000
Common stock, $ 10 par			780,000		780,000
Retained earnings			3,852,850		3,227,150
Total stockholders' equity			$ 5,312,850		$ 4,687,150
Total liabilities and stockholders' equity			$ 10,094,415		$ 7,707,387

Required:

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

Answer 1

1)working capital =current asset -current liabilities

          = 4017321-1181565

          = $ 2,835,756

2)current ratio = current asset /current liabilities

     = 4017321/1181565

       = 3.4

3)Quick ratio = [current asset - Inventory -prepaid expense ]/current liabilities

          = [4017321-598600-182581]/1181565

            = 3236140/1181565

           = 2.7

4)Accounts receivable turnover =Net credit sales /average receivable

              = 4708500 / 784750

               = 6 times

**average receivable = [Ending receivable +beginning receivable ]/2

                       =[810300+759200]/2

                         = 784750