The comparative financial statements of Marshall Inc. are as follows. The market
ID: 2593965 • 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
RATIOS FORMULA ANSWER 6. Inventory turnover Cost of goods sold / Average Inventory 2,081,960 / 671,600 = 3.1 times 7. Number of days' sales in inventory 365 / Inventory turnover 365 / 3.1 = 117.75 days 8. Ratio of fixed assest to long term liabilities Fixed assets / long term liabilities 7,961,253 / 5,000,000 = 1.59:1 9. Ratio of liabilties to stockholder's equity Long term liabilities / Stockholder's equity 5,000,000 / 5,998,850 = 0.83:1 10. Times interest earned Income before interest expense / interest expense 1,367,300 / 400,000 = 3.41 times 11. Asset Turnover Net sales / Average total Assets 5,673,560 / 11,374,545.5 = 0.49 times 12. Return on Total Assets (Net operating Income / Average total assets) * 100 (1,367,300 / 11,374,545.5) * 100 = 12.02% 13. Return on stockholder's equity (Net Income / Average stockholder's equity) * 100 (851,200 / 5,600,000) * 100 = 15.2% 14. Return on common stockholder's equity (Net income / Average common stockholder's equity) * 100 (851,200 / 4,850,000) * 100 = 17.55% 15. Earnings per share on common stock (Net Income - Preference dividend) / Number of outsatnding shares (851,200 - 10,500) / 86,000 = $9.77 16. Price - earnings ratio Market price / EPS 65 / 9.77 = 6.65:1 17. Dividends per share of common stock Dividend on common stock / Shares outstanding 43,000 / 86,000 = $0.5 18. Dividend Yield DPS / Price per share 0.5 / 65 = 0.76%