J. Paid cash for prepaid expenses, T0,000 PR 14-4A Measures of liquidity, solven

Question

J. Paid cash for prepaid expenses, T0,000 PR 14-4A Measures of liquidity, solvency, and profitability ber of days The comparative financial statements of Marshall Inc. are as follows. ables, 18.3 Marshall common stock was $82.60 on December 31, 20Y2. The market price Marshall Inc. Comparative Retained Earnings Statement For the Years Ended December 31, 20Y2 and 20Y1 EXCEL TEMPLATE 20Y2 Retained earnings, January 1.. $3.704,000 $3,264,000 20Y1 600,000 Total Dividends . . 550,000 $4,304,000 $3,814,000 $ 10,000 10,000 100,000 On preferred stock 100,000 110,000

Explanation / Answer

1 calculation of the ratios 2012 1 working capital current assets - current liabilities 2464000 - 880000 1584000 2 current ratio current assets / current liabilities 2464000 / 880000 2.80 3 quick ratio current assets - inventories - prepaid expenses / current liabilities 2464000 - 420000 - 108000 / 880000 1936000 / 880000 2.20 note the quick assets will not include the inventories and the prepaid expenses , accordingly they have been deducted from current assets to arrive quick assets 4 accounts receivable turnover net sales / average accounts receivables average accounts receivables opening accounts receivable + closing accounts receivable / 2 500000 + 585000 / 2 542500 average accounts receivables 10850000 / 542500 20 times

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