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 $26. All of the companys sales are on account.
Weller Corporation Comparative Balance Sheet (dollars in thousands) | ||
---|---|---|
This Year | Last Year | |
Assets | ||
Current assets: | ||
Cash | $ 1,100 | $ 1,310 |
Accounts receivable, net | 10,200 | 8,500 |
Inventory | 12,700 | 11,200 |
Prepaid expenses | 610 | 660 |
Total current assets | 24,610 | 21,670 |
Property and equipment: | ||
Land | 10,100 | 10,100 |
Buildings and equipment, net | 45,606 | 38,588 |
Total property and equipment | 55,706 | 48,688 |
Total assets | $ 80,316 | $ 70,358 |
Liabilities and Stockholders' Equity | ||
Current liabilities: | ||
Accounts payable | $ 19,400 | $ 18,300 |
Accrued liabilities | 940 | 830 |
Notes payable, short term | 210 | 210 |
Total current liabilities | 20,550 | 19,340 |
Long-term liabilities: | ||
Bonds payable | 8,700 | 8,700 |
Total liabilities | 29,250 | 28,040 |
Stockholders' equity: | ||
Common stock | 600 | 600 |
Additional paid-in capital | 4,000 | 4,000 |
Total paid-in capital | 4,600 | 4,600 |
Retained earnings | 46,466 | 37,718 |
Total stockholders' equity | 51,066 | 42,318 |
Total liabilities and stockholders' equity | $ 80,316 | $ 70,358 |
Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) | ||
---|---|---|
This Year | Last Year | |
Sales | $ 69,000 | $ 66,000 |
Cost of goods sold | 35,000 | 37,000 |
Gross margin | 34,000 | 29,000 |
Selling and administrative expenses: | ||
Selling expenses | 11,000 | 10,500 |
Administrative expenses | 6,800 | 6,100 |
Total selling and administrative expenses | 17,800 | 16,600 |
Net operating income | 16,200 | 12,400 |
Interest expense | 870 | 870 |
Net income before taxes | 15,330 | 11,530 |
Income taxes | 6,132 | 4,612 |
Net income | 9,198 | 6,918 |
Dividends to common stockholders | 450 | 240 |
Net income added to retained earnings | 8,748 | 6,678 |
Beginning retained earnings | 37,718 | 31,040 |
Ending retained earnings | $ 46,466 | $ 37,718 |
Required:
Compute the following financial data and ratios for this year:
3. Acid-test ratio. (Round your answer to 2 decimal places.)
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