Chapter 17 Financial Statement Analysi Measures of liquidity, solvency, and prof

Question

Chapter 17 Financial Statement Analysi Measures of liquidity, solvency, and profitability Instructions Questions Instructions The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was $82.80 on December 31, 20Y2 Marshall Inc. Comparative Retained Earnings Statement For the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Y1 2 Retained earnings, January 1 3 Net income 4 Total 3,712,000.00 3,262,000.00 560,000.00 4,282,000.00 $3,822,000.00 570,000.00 Dividends: 6 On preferred stock On common stock Total dividends 10,000.00 100,000.00 110,000.00 4,172,000.00 3,712,000.00 10,000.00 100,000.00 $110,000.00 9 Retained earnings, December 31 Marshall Inc.

Explanation / Answer

5. No of days sale in receivable Sale=108400000, Receivable 584000 365/10840000*584000 19.67 6. Inventory Turnover COGS/Average Inventory 6000000/((410000+380000)/2) 15.18 7. No of days sales in inventory 365/Inventory Turn Over ratio 365/15.18 24.04 8. Ratio of Fixed Assest to Long term Liabilities Fixed Asset/Long term liability 770000/3200000 0.24 9. Ratio of Liability to Stock holders equity Liability/stock holder equity 4100000/4922000 0.83 10. Times interest earned Income before interest and tax/interest exp 1132000/132000 8.58 11. Asset Turnover Net Sales/Average Total Assets 10840000/((9022000+8254000)/2) 1.25 12. Return on total asset Earning before interest and tax/average total asset 1132000/((9022000+8254000)/2)*100 13.10% 13. Return on stock holder equity Net Income/average stock holder equity 570000/((4922000+4462000)/2) 12% 14. Return on common stock holder equity Net Income/average COMMON stock holder equity including Retained Earning 570000/((4672000+4212000)/2) 12.83% 15. Earning per share on common stock Net Income-Preferred Dividend/outstanding no of shares common (570000-10000)/100000 common share 5.6 16. Price Earnign Ratio Price per share/earning per share 82.80 (given)/5.6 14.79 17. Dividend per share on common stock Dividend paid/no. of share 100000/100000 1 18. Dividend Yield Dividend per share/price per share 1/82.8 0.01

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