The comparative financial statements of Marshall Inc. are as follows. The market
ID: 2531322 • Letter: T
Question
The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall Inc. common stock was $ 56 on December 31, 20Y2.
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.
Marshall Inc. Comparative Retained Earnings Statement For the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Y1 Retained earnings, January 1 $ 1,568,100 $ 1,336,200 Net income 345,600 273,700 Total $ 1,830,100 $ 1,609,900 Dividends On preferred stock $ 11,200 $ 11,200 On common stock 30,600 30,600 Total dividends $ 41,800 $ 41,800 Retained earnings, December 31 $ 1,871,900 $ 1,568,100Explanation / Answer
Answer 1.
Working Capital = Current assets - Current Liabilities
Working Capital = $1,368,712 - $441,520
Working Capital = $927,192
Answer 2.
Current Ratio = Current Assets / Current Liabilities
Current Ratio = $1,368,712 / $441,520
Current Ratio = 3.10
Answer 3.
Quick Ratio = (Current Assets - Inventories) / Current Liabilities
Quick Ratio = ($1,368,712 - $277,400) / $441,520
Quick Ratio = 2.47
Answer 4.
Average Accounts Receivable = ($365,000 + $343,100) / 2
Average Accounts Receivable = $354,050
Accounts Receivable Turnover = Sales / Average Accounts Receivable
Accounts Receivable Turnover = $1,841,060 / $354,050
Accounts Receivable Turnover = 5.20
Answer 5.
Number of days’ sales in receivable = 365 / Accounts Receivable Turnover
Number of days’ sales in receivable = 365 / 5.20
Number of days’ sales in receivable = 70.19 days
Answer 6.
Average Inventory = ($277,400 + $219,000) / 2
Average Inventory = $248,200
Inventory Turnover = Cost of Goods Sold / Average Inventory
Inventory Turnover = $744,600 / $248,200
Inventory Turnover = 3
Answer 7.
Number of days’ sales in inventory = 365 / Inventory Turnover
Number of days’ sales in inventory = 365 / 3
Number of days’ sales in inventory = 121.67