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 $ 64 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			$ 1,695,575		$ 1,441,525
Net income			390,000		295,200
Total			$2,085,575		$ 1,736,725
Dividends:
	On preferred stock		$ 11,900		$ 11,900
	On common stock		29,250		29,250
		Total dividends	$ 41,150		$ 41,150
Retained earnings, December 31			$ 2,044,425		$ 1,695,575

Marshall Inc.
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
	20Y2		20Y1
Sales	$ 2,350,965		$ 2,166,060
Cost of goods sold	882,570		811,960
Gross profit	$ 1,468,395		$ 1,354,100
Selling expenses	$ 487,600		$ 604,950
Administrative expenses	415,355		355,290
Total operating expenses	902,955		960,240
Income from operations	$ 565,440		$ 393,860
Other revenue	29,760		25,140
	$ 595,200		$ 419,000
Other expense (interest)	152,000		84,000
Income before income tax	$ 443,200		$ 335,000
Income tax expense	53,200		39,800
Net income	$ 390,000		$ 295,200

Marshall Inc.
Comparative Balance Sheet
December 31, 20Y2 and 20Y1
			Dec. 31, 20Y2		Dec. 31, 20Y1
Assets
Current assets
	Cash		$ 453,410		$ 430,290
	Marketable securities		686,250		713,040
	Accounts receivable (net)		423,400		401,500
	Inventories		321,200		248,200
	Prepaid expenses		85,784		86,060
		Total current assets	$ 1,970,044		$ 1,879,090
Long-term investments			831,364		481,047
Property, plant, and equipment (net)			2,470,000		2,223,000
Total assets			$ 5,271,408		$ 4,583,137
Liabilities
Current liabilities			$ 596,983		$ 1,107,562
Long-term liabilities
	Mortgage note payable, 8 %		$ 850,000		$ 0
	Bonds payable, 8 %		1,050,000		1,050,000
		Total long-term liabilities	$ 1,900,000		$ 1,050,000
Total liabilities			$ 2,496,983		$ 2,157,562
Stockholders' Equity
Preferred $ 0.70 stock, $ 20 par			$ 340,000		$ 340,000
Common stock, $ 10 par			390,000		390,000
Retained earnings			2,044,425		1,695,575
Total stockholders' equity			$ 2,774,425		$ 2,425,575
Total liabilities and stockholders' equity			$ 5,271,408		$ 4,583,137

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		%
2= Horizontal Analysis of the Income Statement Income statement data for Winthrop Company for two recent years ended December 31, are as follows:     Current Year     Previous Year Sales $360,000 $300,000 Cost of goods sold 306,800 260,000 Gross profit $53,200 $40,000 Selling expenses $14,300 $13,000 Administrative expenses 12,980 11,000 Total operating expenses $27,280 $24,000 Income before income tax $25,920 $16,000 Income tax expenses 10,400 6,400 Net income $15,520 $9,600 a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous year. If required, round to one decimal place. Winthrop Company Comparative Income Statement For the Years Ended December 31 Current year Amount Previous year Amount Increase (Decrease) Amount Increase (Decrease) Percent Sales $360,000 $300,000 $ % Cost of goods sold 306,800 260,000 % Gross profit $53,200 $40,000 $ % Selling expenses 14,300 13,000 % Administrative expenses 12,980 11,000 % Total operating expenses $27,280 $24,000 $ % Income before income tax $25,920 $16,000 $ % Income tax expense 10,400 6,400 % Net income $15,520 $9,600 $ % 3 = Current Position Analysis The following data were taken from the balance sheet of Nilo Company at the end of two recent fiscal years: Current Year Previous Year Current assets:   Cash $594,300 $495,600   Marketable securities 688,200 557,600   Accounts and notes receivable (net) 281,500 185,800   Inventories 1,166,900 827,800   Prepaid expenses 601,100 529,200   Total current assets $3,332,000 $2,596,000 Current liabilities:   Accounts and notes payable   (short-term) $394,400 $413,000   Accrued liabilities 285,600 177,000   Total current liabilities $680,000 $590,000 a. Determine for each year (1) the working capital, (2) the current ratio, and (3) the quick ratio. Round ratios to one decimal place. Current Year Previous Year 1. Working capital $ $ 2. Current ratio 3. Quick ratio b. The liquidity of Nilo has from the preceding year to the current year. The working capital, current ratio, and quick ratio have all . Most of these changes are the result of an in current assets relative to current liabilities.

Answer 1