7 Exercise 16-2 (Algo) Financial Ratios for Assessing Liquidity [LO16-2] Comparative financial statements for Weller Corporation, a merchandising company, for the year ending December 31 appear below. The company did not issue any common stock during the year. A total of 700,000 shares of common stock were outstanding. The interest rate on the bond payable was 10%, the income tax rate was 40%, and the dividend per share of common stock was $0.75 last year and $0.40 this year. The market value of the company's common stock at the end of this year was $21. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year Assets Current assets: Cash Accounts receivable, net Inventory Prepaid expenses Total current assets Property and equipment: Land Buildings and equipment, net Total property and equipment Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable Accrued liabilities. Notes payable, short term Total current liabilities Long-term liabilities: Bonds payable Total liabilities: Stockholders' equity: $1,100 9,100 $ 1,290 13,000 8,000 12,500 650 650 23,850 22,440 10,700 10,700 47,469 38,932 58,169 49,632 $ 82,019 $ 72,072 $ 20,000 $ 18,900 1,060 140 820 140 21,200 19,860 8,800 8,800 30,000 28,660 700 700 4,000 4,000 4,700 4,700 Retained earnings 47,319 38,712 Total stockholders' equity. 52,019 43,412 Total liabilities and stockholders' equity $ 82,019 $72,072 Common stock Additional paid-in capital Total paid-in capital 7 Sales Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) Cost of goods sold Gross margin Selling and administrative expenses: Selling expenses Administrative expenses Total selling and administrative expenses Net operating income Interest expense Net income before taxes Income taxes Net income Dividends to common stockholders Net income added to retained earnings Beginning retained earnings Ending retained earnings This Year Last Year $75,000 $ 65,000 41,000 35,000 34,000 30,000 10,800 10,100 7,100 6,600 17,900 16,700 16,100 13,300 880 880 15,220 12,420 6,088 4,968 9,132 7,452 525 280 8,607 7,172 38,712 31,540 $ 47,319 $38,712 Required: Compute the following financial data and ratios for this year: 1. Working capital. Note: Enter your answer in thousands. 2. Current ratio. Note: Round your answer to 2 decimal places. 3. Acid-test ratio. Note: Round your answer to 2 decimal places. 1. Working capital 2. Current ratio 3. Acid-test ratio: