Measures of liquidity, Solvency and Profitability The comparative financial stat
ID: 2589372 • Letter: M
Question
Measures of liquidity, Solvency and Profitability
The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall Inc. common stock was $ 53 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 $ 920,050 $ 779,350 Net income 198,800 159,600 Total $ 1,081,050 $ 938,950 Dividends On preferred stock $ 6,300 $ 6,300 On common stock 12,600 12,600 Total dividends $ 18,900 $ 18,900 Retained earnings, December 31 $ 1,099,950 $ 920,050Explanation / Answer
hi
As per the rules, we cannot answer all 18 points in a strech.
1.) Working Capital= Current Assets - Current Liabilities
= $963468 - $291960
=$671508
2.) Current Ratio = Current Assets/ Current Liabilities
=$963468/291960
=3.30
3.) Quick Ratio = ( Current Assets - Inventory) /Current Liabilities
=( $963468 - $160600)/$291960
=2.74
4.) Accounts receivable Turnover ratio = Net sales/ Average Accounts receivable.
Average Accounts Receivable = (Opening Receivables + Closing Receivables)/2
=($197100 + $2117000/2
=$204400
Accounts receivable turnover ratio = Net sales/ Average Accounts Receivable
= $1226400/$204400
= 6
5.) Number of days of sales in receivables = 365 days/ Accounts receivable turnover ratio
= 365/6
= 61 days.
6.) Inventory Turnover Ratio = cost of goods sold / Average Inventory
Average Inventory = (Opening Inventory + Closing Inventory)/2
Average Invventory = ($116800 + 160600) /2
=$138700.
Inventory Turnover ratio = Cost of goods sold / Average Inventory
= $429970 /$138700
= 3.1
7.) Number of days sales in inventory = 365 days/ Inventory Turnover Ratio
= 365 days / 3.10
=118 days.