The comparative financial statements of Marshall Inc. are as follows. The market
ID: 2593800 • Letter: T
Question
The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was $ 65 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 $ 3,591,150 $ 3,025,050 Net income 851,200 619,600 Total $4,442,350 $ 3,644,650 Dividends: On preferred stock $ 10,500 $ 10,500 On common stock 43,000 43,000 Total dividends $ 53,500 $ 53,500 Retained earnings, December 31 $ 4,388,850 $ 3,591,150Explanation / Answer
Answer 1.
Working Capital = Current Assets - Current Liabilities
Working Capital = $4,636,332 - $1,598,735
Working Capital = $3,037,597
Answer 2.
Current Ratio = Current Assets / Current Liabilities
Current Ratio = $4,636,332 / $1,598,735
Current Ratio = 2.9
Answer 3.
Quick Ratio = (Current Assets - Inventories - Prepaid Expenses) / Current Liabilities
Quick Ratio = ($4,636,332 - $759,200 - $200,882) / $1,598,735
Quick Ratio = 2.3
Answer 4.
Average Accounts Receivable = ($1,007,400 + $949,000) / 2
Average Accounts Receivable = $978,200
Accounts Receivable Turnover = Sales / Average Accounts Receivable
Accounts Receivable Turnover = $5,673,560 / $978,200
Accounts Receivable Turnover = 5.8
Answer 5.
Number of days’ sales in receivable = 365 / Accounts Receivable Turnover
Number of days’ sales in receivable = 365 / 5.8
Number of days’ sales in receivable = 62.9 days