Question

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 $ 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		$3,356,900

   Marshall Inc.
   Comparative Income Statement
   For the Years Ended December 31, 20Y2 and 20Y1
   	20Y2		20Y1
   Sales	$4,639,515		$4,274,620
   Cost of goods sold	1,719,880		1,582,290
   Gross profit	$2,919,635		$2,692,330
   Selling expenses	$996,250		$1,208,080
   Administrative expenses	848,655		709,500
   Total operating expenses	$1,844,905		$1,917,580
   Income from operations	$1,074,730		$774,750
   Other revenue	56,570		49,450
   	$1,131,300		$824,200
   Other expense (interest)	304,000		167,200
   Income before income tax	$827,300		$657,000
   Income tax expense	99,300		79,200
   Net income	$728,000		$577,800

   Marshall Inc.
   Comparative Balance Sheet
   December 31, 20Y2 and 20Y1
   			20Y2		20Y1
   Assets
   Current assets
   	Cash		$776,660		$712,430
   	Marketable securities		1,175,480		1,180,590
   	Accounts receivable (net)		839,500		788,400
   	Inventories		627,800		481,800
   	Prepaid expenses		146,930		142,490
   		Total current assets	$3,566,370		$3,305,710
   Long-term investments			2,025,520		310,995
   Property, plant, and equipment (net)			4,940,000		4,446,000
   Total assets			$10,531,890		$8,062,705
   Liabilities
   Current liabilities			$1,188,790		$1,115,805
   Long-term liabilities:
   	Mortgage note payable, 8%		$1,710,000		$0
   	Bonds payable, 8%		2,090,000		2,090,000
   		Total long-term liabilities	$3,800,000		$2,090,000
   Total liabilities			$4,988,790		$3,205,805
   Stockholders' Equity
   Preferred $0.70 stock, $50 par			$700,000		$700,000
   Common stock, $10 par			800,000		800,000
   Retained earnings			4,043,100		3,356,900
   Total stockholders' equity			$5,543,100		$4,856,900
   Total liabilities and stockholders' equity			$10,531,890		$8,062,705

   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