Question
Comparative financial statements for Weller Corporation, a merchandising company, for the year ending December 31 appear below. The company did not issue any new common
Comparative financial statements for Weller Corporation, a merchandising company, for the year ending December 31 appear below. The company did not issue any new common stock during the year. A total of 600,000 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 companys common stock at the end of this year was $28. All of the companys sales are on account.
Weller Corporation Comparative Balance Sheet (dollars in thousands) | ||||||
This Year | Last Year | |||||
Assets | ||||||
Current assets: | ||||||
Cash | $ | 1,170 | $ | 1,320 | ||
Accounts receivable, net | 11,000 | 6,800 | ||||
Inventory | 12,800 | 11,900 | ||||
Prepaid expenses | 800 | 520 | ||||
Total current assets | 25,770 | 20,540 | ||||
Property and equipment: | ||||||
Land | 9,300 | 9,300 | ||||
Buildings and equipment, net | 46,423 | 42,536 | ||||
Total property and equipment | 55,723 | 51,836 | ||||
Total assets | $ | 81,493 | $ | 72,376 | ||
Liabilities and Stockholders' Equity | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 20,100 | $ | 18,800 | ||
Accrued liabilities | 920 | 870 | ||||
Notes payable, short term | 180 | 180 | ||||
Total current liabilities | 21,200 | 19,850 | ||||
Long-term liabilities: | ||||||
Bonds payable | 8,900 | 8,900 | ||||
Total liabilities | 30,100 | 28,750 | ||||
Stockholders' equity: | ||||||
Common stock | 600 | 600 | ||||
Additional paid-in capital | 4,000 | 4,000 | ||||
Total paid-in capital | 4,600 | 4,600 | ||||
Retained earnings | 46,793 | 39,026 | ||||
Total stockholders' equity | 51,393 | 43,626 | ||||
Total liabilities and stockholders' equity | $ | 81,493 | $ | 72,376 | ||
Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) | ||||||
This Year | Last Year | |||||
Sales | $ | 77,430 | $ | 65,000 | ||
Cost of goods sold | 45,695 | 32,000 | ||||
Gross margin | 31,735 | 33,000 | ||||
Selling and administrative expenses: | ||||||
Selling expenses | 10,800 | 10,900 | ||||
Administrative expenses | 6,700 | 6,900 | ||||
Total selling and administrative expenses | 17,500 | 17,800 | ||||
Net operating income | 14,235 | 15,200 | ||||
Interest expense | 890 | 890 | ||||
Net income before taxes | 13,345 | 14,310 | ||||
Income taxes | 5,338 | 5,724 | ||||
Net income | 8,007 | 8,586 | ||||
Dividends to common stockholders | 240 | 600 | ||||
Net income added to retained earnings | 7,767 | 7,986 | ||||
Beginning retained earnings | 39,026 | 31,040 | ||||
Ending retained earnings | $ | 46,793 | $ | 39,026 | ||
Required:
Compute the following financial data for this year:
1. Accounts receivable turnover. (Assume that all sales are on account.) (Round your answer to 2 decimal places.)
2. Average collection period. (Use 365 days in a year. Round your intermediate calculations and final answer to 2 decimal places.)
3. Inventory turnover. (Round your answer to 2 decimal places.)
4. Average sale period. (Use 365 days in a year. Round your intermediate calculations and final answer to 2 decimal places.)
5. Operating cycle. (Round your intermediate calculations and final answer to 2 decimal places.)
6. Total asset turnover. (Round your answer to 2 decimal places.)
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