17.3 8. Measures of liquidity, The ability of a company to make its periodic int
ID: 2526694 • Letter: 1
Question
17.3
8.
Measures of liquidity, The ability of a company to make its periodic interest payments and repay the face amount of debt at maturity.Solvency and The ability of a firm to generate earnings.Profitability
The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was $ 64 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 $ 2,812,200 $ 2,363,700 Net income 651,200 484,100 Total $3,463,400 $ 2,847,800 Dividends: On preferred stock $ 8,400 $ 8,400 On common stock 27,200 27,200 Total dividends $ 35,600 $ 35,600 Retained earnings, December 31 $ 3,427,800 $ 2,812,200 Onelogin News | Dashboard CengageNOWv2 x C Chegg Study | Guide C Chegg Study | Guide ? ? ? ? ? v2 cengagenow con intake ssignment takeAssignmen Main doi voker-assignments& takeAssignmentSessionLoca or-assignment t ? ? ? ? Ch 17-3 Exercises and Problems eBook 1. Working capital 2. Current ratio 3. Quick ratio 4. Accounts receivable turnover 5. Number of days' sales in receivables 6. Inventory turnover 7. Number of days' sales in inventory 8. Ratio of fixed assets to long-term liabilities 9. Ratio of liabilities to stockholders' equity 10. Times interest earned 11. Asset turnover 12. Return on total assets 13. Return on stockholders' equity 14. Return on common stockholders' equity 15. Earnings per share on common stock 16. Price-earnings ratio 17. Dividends per share of common stock 18. Dividend yield Calculator Print Item ?| 1. EX.17-01.ALGO 2. EX.17-04.ALGO 3. EX.17-05.ALGO days 4. EX.17-06.ALGO 5. EX.17-19.ALGO days 6. EX.17-20.ALGO 7. EX.17-21.ALGO 8. PR.17-04.ALGO Check My Work 2 more Check My Work uses remaining Previous Type here to search 00 AM 4/20/2018 25Explanation / Answer
Solution:
1)
Working Capital = $3,068,592
Working Capital =
Current Assets
-
Current Liabilities
=
Working Capital
20Y2
4347172
-
1278580
=
3068592
2, 3 & 4)
Numerator
/
Denominator
=
Ratio
2)
Current Ratio
Current Assets
/
Current Liabilities
=
Current Ratio
times
20Y2
4,347,172
/
1,278,580
=
3.40
times
3)
Quick Ratio
Current Assets - Inventory - Prepaid Expenses
/
Current Liabilities
=
Quick Ratio
times
Quick Ratio 20Y2
3,541,360
(4,347,172 – 598,600 – 207,212)
/
1,278,580
=
2.77
times
4)
Accounts Receivable Turnover
Net Credit Sales
/
Average Accounts Receivable, net
=
Receivable Turnover Ratio
Accounts Receivable Turnover
4,215,750
/
766500
[(788,400 + 744,600)/2]
=
5.50
Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you
Pls ask separate question for remaining parts.
Working Capital =
Current Assets
-
Current Liabilities
=
Working Capital
20Y2
4347172
-
1278580
=
3068592
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