Question

Measures of liquidity, Solvency, and Profitability

The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was $ 62 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			$1,928,150		$1,622,150
Net income			450,000		332,300
Total			$2,378,150		$1,954,450
Dividends:
	On preferred stock		$5,600		$5,600
	On common stock		20,700		20,700
		Total dividends	$26,300		$26,300
Retained earnings, December 31			$2,351,850		$1,928,150

Marshall Inc.
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
	20Y2		20Y1
Sales	$2,467,400		$2,273,380
Cost of goods sold	931,480		856,960
Gross profit	$1,535,920		$1,416,420
Selling expenses	$476,760		$611,170
Administrative expenses	406,130		358,940
Total operating expenses	$882,890		$970,110
Income from operations	$653,030		$446,310
Other revenue	34,370		28,490
	$687,400		$474,800
Other expense (interest)	176,000		96,800
Income before income tax	$511,400		$378,000
Income tax expense	61,400		45,700
Net income	$450,000		$332,300

Marshall Inc.
Comparative Balance Sheet
December 31, 20Y2 and 20Y1
			20Y2		20Y1
Assets
Current assets
	Cash		$476,180		$456,160
	Marketable securities		720,700		755,930
	Accounts receivable (net)		489,100		459,900
	Inventories		365,000		277,400
	Prepaid expenses		90,082		91,230
		Total current assets	$2,141,062		$2,040,620
Long-term investments			1,321,453		560,511
Property, plant, and equipment (net)			2,640,000		2,376,000
Total assets			$6,102,515		$4,977,131
Liabilities
Current liabilities			$690,665		$978,981
Long-term liabilities:
	Mortgage note payable, 8%		$990,000		$0
	Bonds payable, 8%		1,210,000		1,210,000
		Total long-term liabilities	$2,200,000		$1,210,000
Total liabilities			$2,890,665		$2,188,981
Stockholders' Equity
Preferred $0.70 stock, $50 par			$400,000		$400,000
Common stock, $10 par			460,000		460,000
Retained earnings			2,351,850		1,928,150
Total stockholders' equity			$3,211,850		$2,788,150
Total liabilities and stockholders' equity			$6,102,515		$4,977,131

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

Working Capital	1,450,397
(current asset - Current Liabilities)
Current Ratio	3.10
(current asset / Current Liabilities)
Quick Ratio	2.44
(marketable Securities + Accounts recivable+Cash / Current Liabilities)
Accounts Receivable Turnover	5.2
(Credit Sales/Average Accounts Receivable)
Number of days outsatanding	70
(365/Accounts Receivable Turnover)
Inventory Turnover	2.90
(COGS/Average Inventory)
Number of days In inventory	126
(365/Inventory Turonver)
Ratio of fixed assets to long-term liabilities	1.20
Ratio of liabilities to stockholders' equity	0.90
Times Interest Earned	3.91
(Net income before Interest/Interest)
Aasset Turnover	0.45
(Total Sales/Average total Asset)
Return on Total Asset	8%
(Total Sales/Average total Asset)
Return on Stock Holder Equity	52%
(net income/total Stock)
Return on Stock Holder Equity	97%
(net income-Preferred dividend/Common Stock)
Earnings Per Share	0.86
(net income-Preferred dividend/Common Stock shares)
Price Earning Ratio	72
(Market price/EPS)
Dividend Per Share	0.57
Dividend Yield	0.92%