Question
In: Accounting
Based on a company's financial statement, how does liquidity, solvency and profitability make the company look...
Based on a company's financial statement, how does liquidity, solvency and profitability make the company look favorable?
Solutions
Expert Solution
Solvency tells about how the ability of the company to meet its long term financial commitments. So if the company is able to meet its commitments in the long term then it surely stands out.
Liquidity refers to the ability of the company to meets its short term financial obligations. SO if the company is able to meet its obligations of short term then it makes it better for the short term.
Profitability is the ability to earn the profit by the company. Higher the profit, the better it is for all the stakeholders.
Hence, these three are the parameters to measure the holistic success of an organization.
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ekkarill92 answered 1 year agoRelated Solutions
Describe and discuss the importance of profitability, solvency and liquidity for the financial analysis of a...
Describe and discuss the importance of profitability,
solvency and liquidity for the financial analysis of a
business.
Solvency ratios measure a company's general financial performance. a company's cash flow. a company's liquidity. a...
Solvency ratios measure
a company's general financial performance.
a company's cash flow.
a company's liquidity.
a company's ability to survive over the long term.
Measures of liquidity, Solvency, and Profitability The comparative financial statements of Marshall Inc. are as follows....
Measures of liquidity, Solvency, and Profitability
The comparative financial statements of Marshall Inc. are as
follows. The market price of Marshall common stock was $ 69 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
$3,577,150
$3,023,350
Net income
851,200
619,300
Total
$4,428,350
$3,642,650
Dividends:
On preferred stock
$13,300
$13,300
On common stock
52,200
52,200
Total dividends
$65,500
$65,500
Retained earnings, December 31
$4,362,850...
Measures of liquidity, Solvency and Profitability The comparative financial statements of Marshall Inc. are as follows....
Measures of liquidity, Solvency and Profitability
The comparative financial statements of Marshall Inc. are as
follows. The market price of Marshall Inc. common stock was $ 66 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
$ 1,413,000
$ 1,202,700
Net income
330,000
246,300
Total
$ 1,671,000
$ 1,449,000
Dividends
On preferred stock
$ 10,500
$ 10,500
On common stock
25,500
25,500
Total dividends...
Measures of liquidity, Solvency, and Profitability The comparative financial statements of Marshall Inc. are as follows....
Measures of liquidity, Solvency, and Profitability
The comparative financial statements of Marshall Inc. are as
follows. The market price of Marshall common stock was $ 65 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
$3,356,900
$2,820,900
Net income
728,000
577,800
Total
$4,084,900
$3,398,700
Dividends:
On preferred stock
$9,800
$9,800
On common stock
32,000
32,000
Total dividends
$41,800
$41,800
Retained earnings, December 31
$4,043,100...
1. Measures of liquidity, Solvency, and Profitability The comparative financial statements of Marshall Inc. are as...
1.
Measures of liquidity, Solvency, and Profitability
The comparative financial statements of Marshall Inc. are as
follows. The market price of Marshall common stock was $ 56 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
$4,770,100
$4,018,100
Net income
1,050,800
823,000
Total
$5,820,900
$4,841,100
Dividends:
On preferred stock
$14,000
$14,000
On common stock
57,000
57,000
Total dividends
$71,000
$71,000
Retained earnings, December 31...
Measures of liquidity, Solvency and Profitability The comparative financial statements of Marshall Inc. are as follows....
Measures of liquidity, Solvency and Profitability
The comparative financial statements of Marshall Inc. are as
follows. The market price of Marshall Inc. common stock was $ 61 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
$ 920,575
$ 780,625
Net income
198,800
159,900
Total
$ 1,119,375
$ 940,525
Dividends
On preferred stock
$ 6,300
$ 6,300
On common stock
13,650
13,650
Total dividends...
Measures of liquidity, Solvency, and Profitability The comparative financial statements of Marshall Inc. are as follows....
Measures of liquidity, Solvency, and Profitability
The comparative financial statements of Marshall Inc. are as
follows. The market price of Marshall common stock was $ 56 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
$2,541,175
$2,144,325
Net income
600,000
439,200
Total
$3,141,175
$2,583,525
Dividends:
On preferred stock
$7,700
$7,700
On common stock
34,650
34,650
Total dividends
$42,350
$42,350
Retained earnings, December 31
$3,098,825...
Measures of liquidity, Solvency, and Profitability The comparative financial statements of Marshall Inc. are as follows....
Measures of liquidity, Solvency, and Profitability
The comparative financial statements of Marshall Inc. are as
follows. The market price of Marshall common stock was $ 67 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
$3,346,500
$2,812,300
Net income
748,800
576,000
Total
$4,095,300
$3,388,300
Dividends:
On preferred stock
$9,800
$9,800
On common stock
32,000
32,000
Total dividends
$41,800
$41,800
Retained earnings, December 31
$4,053,500...
Measures of liquidity, Solvency, and Profitability The comparative financial statements of Marshall Inc. are as follows....
Measures of liquidity, Solvency, and Profitability
The comparative financial statements of Marshall Inc. are as
follows. The market price of Marshall common stock was $ 55 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
$1,651,550
$1,389,650
Net income
379,600
284,600
Total
$2,031,150
$1,674,250
Dividends:
On preferred stock
$6,300
$6,300
On common stock
16,400
16,400
Total dividends
$22,700
$22,700
Retained earnings, December 31
$2,008,450...
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