Measures of liquidity, Solvency and Profitability The comparative financial stat

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 $ 61 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 $ 1,669,200 $ 1,416,300 Net income 358,800 290,100 Total $ 1,953,600 $ 1,706,400 Dividends On preferred stock $ 12,600 $ 12,600 On common stock 24,600 24,600 Total dividends $ 37,200 $ 37,200 Retained earnings, December 31 $ 1,990,800 $ 1,669,200

Explanation / Answer

2299500/4417857*=0.5

*(3866274+4969440)/2=4417857

358800/4417857*=8.12%

*(3866274+4969440)/2=4417857

S.No Formula Ratio 1 Ratio of liabilities to stockholders' equity=Total Liabilities/Shareholders' Equity 2208640/2760800=0.8 2 Times interest earned= Eaning before interest and Tax expense/Interest expense 543700/136000=4 3 Asset turnover=Net Sales/Average Total Asset

2299500/4417857*=0.5

*(3866274+4969440)/2=4417857

4 Return on total assets= Net Income/Average Total Asset

358800/4417857*=8.12%

*(3866274+4969440)/2=4417857

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