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 $ 58 on December 31, 20Y2. Marshall Inc. 2011 Comparative Retained Earnings Statement For the Years Ended December 31, 20Y2 and 2041 2012 Retained earnings, January 1 $3,625,150 Net income 817,600 Total $4,442,750 $3,081,850 631,200 $3,713,050 Dividends: On preferred stock $10,500 77,400 $10,500 77,400 On common stock Total dividends $87,900 $87,900 $4,354,850 Retained earnings, December 31 $3,625,150 Marshall Inc. Comparative Income Statement For the Years Ended December 31, 20Y2 and 2041 2012 2011 $5,825,400 $5,367,270 Sales Cost of goods sold Gross profit 1,839,600 1,692,430 $3,985,800 $3,674,840 Selling expenses Administrative expenses Total operating expenses Income from operations $1,760,260 1,033,800 $2,794,060 $1,470,510 1,252,650 $2,723,160 $1,262,640 66,460 $1,329,100 $880,780 Other revenue 56,220 $937,000

UPDATE: i answered number 16 correctly, which is 6.2, but i am still getting number 14 and 15 wrong and i'm not sure where i am going wrong in my calculations...

Answer 1

Marshall Inc.

Ratio Analysis for 20Y2:

			$
14	Return on common shareholders equity	(Net income -dividend on preferred stock) / Average common shareholders equity	(817,600-10,500)/{(860,000+43,54,850)+(860,000+36,25,150)}/2 = 807,100/48,50,000	16.64%
15	Earnings per share on common stock	Earnings available to common shareholders/ weighted average common shares	(817,600-10,500)/{((860,000+860,000)/2)/10} = 807,100/(860,000/10) = 807,100/86,000	$ 9.38 per share
16	Price earnings ratio	market price / Earnings per share	58/9.38	6.18 times