Question

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 $ 61 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			$ 1,654,075		$ 1,400,225
Net income			384,800		286,800
Total			$2,038,875		$ 1,687,025
Dividends:
	On preferred stock		$ 6,300		$ 6,300
	On common stock		26,650		26,650
		Total dividends	$ 32,950		$ 32,950
Retained earnings, December 31			$ 2,005,925		$ 1,654,075

Marshall Inc.
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
	20Y2		20Y1
Sales	$ 2,144,740		$ 1,976,030
Cost of goods sold	825,630		759,580
Gross profit	$ 1,319,110		$ 1,216,450
Selling expenses	$ 410,010		$ 523,560
Administrative expenses	349,270		307,490
Total operating expenses	$759,280		$831,050
Income from operations	$ 559,830		$ 385,400
Other revenue	29,470		24,600
	$ 589,300		$ 410,000
Other expense (interest)	152,000		84,000
Income before income tax	$ 437,300		$ 326,000
Income tax expense	52,500		39,200
Net income	$ 384,800		$ 286,800

Marshall Inc.
Comparative Balance Sheet
December 31, 20Y2 and 20Y1
			20Y2		20Y1
Assets
Current assets
	Cash		$ 410,790		$ 416,310
	Marketable securities		621,730		689,880
	Accounts receivable (net)		423,400		401,500
	Inventories		321,200		248,200
	Prepaid expenses		77,712		83,260
		Total current assets	$ 1,854,832		$ 1,839,150
Long-term investments			1,329,426		765,592
Property, plant, and equipment (net)			2,090,000		1,881,000
Total assets			$ 5,274,258		$ 4,485,742
Liabilities
Current liabilities			$ 598,333		$ 1,011,667
Long-term liabilities:
	Mortgage note payable, 8%		$ 850,000		$ 0
	Bonds payable, 8%		1,050,000		1,050,000
		Total long-term liabilities	$ 1,900,000		$ 1,050,000
Total liabilities			$ 2,498,333		$ 2,061,667
Stockholders' Equity
Preferred $0.70 stock, $40 par			$ 360,000		$ 360,000
Common stock, $10 par			410,000		410,000
Retained earnings			2,005,925		1,654,075
Total stockholders' equity			$ 2,775,925		$ 2,424,075
Total liabilities and stockholders' equity			$ 5,274,258		$ 4,485,742

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.

15. The profitability ratio of net income available to common shareholders to the number of common shares outstanding.Earnings per share on common stock	$
16. The ratio of the market price per share of common stock, at a specific date, to the annual earnings per share.Price-earnings ratio
17. Measures the extent to which earnings are being distributed to common shareholders.Dividends per share of common stock	$
18. A ratio, computed by dividing the annual dividends paid per share of common stock by the market price per share at a specific date, that indicates the rate of return to stockholders in terms of cash dividend distributions.Dividend yield

Answer 1