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 $ 53 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			$ 2,342,300		$ 1,978,500
Net income			496,800		405,200
Total			$2,839,100		$ 2,383,700
Dividends:
	On preferred stock		$ 8,400		$ 8,400
	On common stock		33,000		33,000
		Total dividends	$ 41,400		$ 41,400
Retained earnings, December 31			$ 2,797,700		$ 2,342,300

Marshall Inc.
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
	20Y2		20Y1
Sales	$ 3,168,200		$ 2,919,000
Cost of goods sold	1,122,010		1,032,250
Gross profit	$ 2,046,190		$ 1,886,750
Selling expenses	$ 708,650		$ 848,490
Administrative expenses	603,670		498,320
Total operating expenses	$1,312,320		$1,346,810
Income from operations	$ 733,870		$ 539,940
Other revenue	38,630		34,460
	$ 772,500		$ 574,400
Other expense (interest)	208,000		114,400
Income before income tax	$ 564,500		$ 460,000
Income tax expense	67,700		54,800
Net income	$ 496,800		$ 405,200

Marshall Inc.
Comparative Balance Sheet
December 31, 20Y2 and 20Y1
			20Y2		20Y1
Assets
Current assets
	Cash		$ 528,470		$ 437,290
	Marketable securities		799,850		724,650
	Accounts receivable (net)		584,000		547,500
	Inventories		438,000		335,800
	Prepaid expenses		99,977		87,460
		Total current assets	$ 2,450,297		$ 2,132,700
Long-term investments			1,442,333		27,006
Property, plant, and equipment (net)			3,380,000		3,042,000
Total assets			$ 7,272,630		$ 5,201,706
Liabilities
Current liabilities			$ 844,930		$ 399,406
Long-term liabilities:
	Mortgage note payable, 8%		$ 1,170,000		$ 0
	Bonds payable, 8%		1,430,000		1,430,000
		Total long-term liabilities	$ 2,600,000		$ 1,430,000
Total liabilities			$ 3,444,930		$ 1,829,406
Stockholders' Equity
Preferred $0.70 stock, $40 par			$ 480,000		$ 480,000
Common stock, $10 par			550,000		550,000
Retained earnings			2,797,700		2,342,300
Total stockholders' equity			$ 3,827,700		$ 3,372,300
Total liabilities and stockholders' equity			$ 7,272,630		$ 5,201,706

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.

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