Measures of liquidity, Solvency and Profitability The comparative financlal stat
ID: 2390568 • Letter: M
Question
Measures of liquidity, Solvency and Profitability The comparative financlal 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 Net income Total Dividends: 3,581,500 851,200 $4,432,700 $3,034,200 621,500 $3,655,700 On preferred stock On common stock Total dividends 13,300 60,900 74,200 s 4,358,500 13,300 60,900 74,200 $ 3,581,500 Retained earnings, December 31Explanation / Answer
Ratio Formula Working Answer 1 Working Capital Current Assets - Current Liabilities 4920785-1587350 3,333,435.00 2 Current Ratio Current Assets / Current Liabilities 4920785/1587350 3.1 3 Quick Ratio Cash & Cash Equivalents + Accounts Receivable + Short Term investments / Current Liabilites (1167050+1766340+1007400)/1587350 2.5 4 Accounts Receivable Turnover Net Credit Sales /Average Accounts Receivable 5575740/((1007400+949000)/2) 5.7 5 No of Days sales in receivables 365/Accounts Receivable Turnover 365/5.7 64.0 days 6 Inventory Turnover Ratio Cost of Goods Sold/Average Inventory 1947640/((759200+584000)/2) 2.9 7 No of Days sales in Inventory 365/Inventory Turnover Ratio 365/2.9 125.9 days 8 Ratio of fixed assets to long term liabilities Fixed Assets/Long Term Liabilities 5500000/5000000 1.1 9 Ratio of Liabilities to Stockholders' Equity Total Liabilities/Stockholders' Equity 6587350/5988500 1.1 10 Times Interest Earned EBIT/Interest Expense 1367300/400000 3.4 11 Asset Turnover Net Sales/Average Total Assets 5575740/((12575850+9968294)/2) 0.5 12 Return on Total Assets EBIT/Total Assets*100 1367300/12575850*100 10.9 % 13 Return on Stockholders' Equity Net Income/Stockholders's Equity*100 851200/5988500*100 14.2 % 14 Return on Common Stockholders' Equity Net Income available to common stockholders/Common Stockholders's Equity*100 (851200-13300)/(5988500-760000)*100 16.0 % 15 Earnings Per Share on Common Stock Net Income available to common stockholders/No of Common Stock Shares (851200-13300)/(870000/10) 9.63 $ 16 Price Earnings Ratio Market Value per Share / Earnings per Share 62/9.63 6.4 17 Dividends per share of common stock Common stock dividend/No of Common Stock Shares 60900/(870000/10) 0.70 $ 18 Dividend Yield Annual Dividend/ Current Market Value per share 0.70/62*100 1.1 %