Measures of liquidity, Solvency and Profitability The comparative financial stat
ID: 2798958 • Letter: M
Question
Measures of liquidity, Solvency and Profitability The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was $ 59 on December 31, 20Y2. Marshall Inc. Comparative Retained Earnings Statement For the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Y1 Retained earnings, January 1 Net income Total Dividends: s2,711,300 638,400 $3,349,700 $2,301,000 471,300 $2,772,300 On preferred stock On common stock Total dividends 9,800 51,200 61,000 $3,288,700 $9,800 51,200 61,000 $ 2,711,300 Retained earnings, December 31 Marshall Inc. Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Y1 Sales Cost of goods sold Gross profit 4,307,000 1,511,100 $ 2,795,900 $3,968,300 1,390,210 $2,578,090Explanation / Answer
Ratios Formula Values Ratio Working Capital Current Assets - Current labilities =3298953-1137570 $2161383 Current Ratio Current Assets /Current labilities =3298953/1137570 2.90 Times Quick Ratio (Cash + Accounts recievables)/Current Liabilties =+(731730+1107490+751900)/1137570 2.28 Times Accounts Recievables turnover Sales/Average Accounts recievable =4307000/((751900+708100)/2) 5.90 Times No. of days sales is recievable 365/Accounts Recievables turnover =365/5.9 61.86 Days Inventory Turnover COGS/Average Inventory =1511100/((569400+438000)/2) 3.00 Times No. of days of inventory 365/Inventory Turnover =365/3 121.67 Days Ratio of Fied assets to long tem liabilities Fixed Assets/Long Term Liabilities =+(1947317+4180000)/3800000 1.61 Times Ratio of Liability to Shareholder's equity Total Liabilities/Shareholder's Equity =4937570/4488700 1.10 Times Times Interest earned EBIT/Interest Expense =1029500/304000 3.39 Dollars Assets Turnover Sales/Average Total Assets =4307000/((9426270+7402301)/2) 51.19% Return on Total Assets Net Income/Total Assets =638400/((9426270+7402301)/2) 7.59% Return on Stockholder's equity Net Income/Shareholder's Equity =638400/((4488700+3911300)/2) 15.20% Return on common stockholders equity (Net Income - Dividend to preferred Shareholders)/Common Shareholder's Equity =(638400-9800)/((4488700+3911300-560000-560000)/2) 17.27% Earnings per share on common stock (Net Income - Dividend to preferred Shareholders)/NO. of shares outstanding =(638400-9800)/64000 9.82 Dollars Price earnings ratio Market price per share/EPS =59/9.822 6.01 Times Dividend per share of common stock Dividend to common Equity/NO. of shares Outstanding =51200/64000 0.80 Dollars Divident Yield Dividend per share/Market Price per share =0.8/59 1.36%