The comparative financial statements of Marshall Inc. are as follows. The market
ID: 2576753 • Letter: T
Question
The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was $82.80 on December 31, 20Y2.
Marshall Inc.
Comparative Retained Earnings Statement
For the Years Ended December 31, 20Y2 and 20Y1
1
20Y2
20Y1
2
Retained earnings, January 1
$3,712,000.00
$3,262,000.00
3
Net income
589,000.00
560,000.00
4
Total
$4,301,000.00
$3,822,000.00
5
Dividends:
6
On preferred stock
$10,000.00
$10,000.00
7
On common stock
100,000.00
100,000.00
8
Total dividends
$110,000.00
$110,000.00
9
Retained earnings, December 31
$4,191,000.00
$3,712,000.00
Marshall Inc.
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
1
20Y2
20Y1
2
Sales
$10,840,000.00
$10,000,000.00
3
Cost of goods sold
6,000,000.00
5,440,000.00
4
Gross profit
$4,840,000.00
$4,560,000.00
5
Selling expenses
$2,180,000.00
$2,000,000.00
6
Administrative expenses
1,627,500.00
1,500,000.00
7
Total operating expenses
$3,807,500.00
$3,500,000.00
8
Income from operations
$1,032,500.00
$1,060,000.00
9
Other income
99,500.00
20,000.00
10
$1,132,000.00
$1,080,000.00
11
Other expense (interest)
133,000.00
120,000.00
12
Income before income tax
$999,000.00
$960,000.00
13
Income tax expense
410,000.00
400,000.00
14
Net income
$589,000.00
$560,000.00
Marshall Inc.
Comparative Balance Sheet
December 31, 20Y2 and 20Y1
1
20Y2
20Y1
2
Assets
3
Current assets:
4
Cash
$1,050,000.00
$950,000.00
5
Marketable securities
301,000.00
420,000.00
6
Accounts receivable (net)
584,000.00
500,000.00
7
Inventories
410,000.00
380,000.00
8
Prepaid expenses
109,000.00
20,000.00
9
Total current assets
$2,454,000.00
$2,270,000.00
10
Long-term investments
800,000.00
800,000.00
11
Property, plant, and equipment (net)
5,750,000.00
5,184,000.00
12
Total assets
$9,004,000.00
$8,254,000.00
13
Liabilities
14
Current liabilities
$863,000.00
$792,000.00
15
Long-term liabilities:
16
Mortgage note payable, 6%,
$200,000.00
$0.00
17
Bonds payable, 4%,
3,000,000.00
3,000,000.00
18
Total long-term liabilities
$3,200,000.00
$3,000,000.00
19
Total liabilities
$4,063,000.00
$3,792,000.00
20
Stockholders’ Equity
21
Preferred 4% stock, $5 par
$250,000.00
$250,000.00
22
Common stock, $5 par
500,000.00
500,000.00
23
Retained earnings
4,191,000.00
3,712,000.00
24
Total stockholders’ equity
$4,941,000.00
$4,462,000.00
25
Total liabilities and stockholders’ equity
$9,004,000.00
$8,254,000.00
Determine the following measures for 20Y2 (round to one decimal place, including percentages, except for per-share amounts): Assume a 365-day year.
Questions
Determine the following measures for 20Y2 (round to one decimal place, including percentages, except for per-share amounts): Assume a 365-day year.
Marshall Inc.
Comparative Retained Earnings Statement
For the Years Ended December 31, 20Y2 and 20Y1
Explanation / Answer
Dear Student,
Regards,
20Y2 20Y1 1 Working Capital =(Current Assets Less Current Liabilities) ($) 1,591,000.00 1,478,000.00 2 Current Ratio = (Current Assets/Current liabilities) 2.8 2.9 3 Quick Ratio = (Current Assets Less prepaid expenses and inventory/Current liabilities) 2.2 2.4 4 Account receivable turnover Ratio
(Net Credit Sales/Average Account Receivables) 20 times -- 5 Number of days' sales in receivables
(No. of days in a year/Account receivable turnover ratio) 18.3 -- 6 Inventory Turnover (Cost of goods sold/ Average Inventory) 15.2 -- 7 Number of days' sales in inventory
(No. of days in a year/Inventory Turnover) 24.0 -- 8 Ratio of fixed assets to long-term liabilities
(Fixed Assets/Long term liabilities) 1.8 1.7 9 Ratio of liabilities to stockholders’ equity
(Total Liabilities/Shareholders' Equity) 0.8 0.8 10 Times interest earned
(earnings before interest & taxes/interest expense) 8.5:1 9:1 11 Asset turnover (Net Sales/Average Total assets) 1.3 -- 12 Return on total assets (Earning before interest & Taxes/Total Assets) (%) 12.6 13.1 13 Return on stockholders’ equity. (%)
(Net Income)/Average Common Stockholders' Equity 12.5 -- 14 Return on common stockholders’ equity (%)
(Net Income - Preferred dividend)/Average Common Stockholders' Equity) 12.3 -- 15 Earnings per share on common stock ($)
(Net Income Less dividends/No of common equity shares) 4.8 4.5 16 Price-earnings ratio (Market Value/Earning per share) 17.29 -- 17 Dividends per share of common stock ($)
(Dividend on common stock/No of common stock shares) 1.00 1.00 18 Dividend yield (Annual Dividend/Market price) (%) 1.21 --