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 | $ | 1,190 | $ | 1,250 | ||
Accounts receivable, net | 9,900 | 8,500 | ||||
Inventory | 12,400 | 11,300 | ||||
Prepaid expenses | 730 | 520 | ||||
Total current assets | 24,220 | 21,570 | ||||
Property and equipment: | ||||||
Land | 10,800 | 10,800 | ||||
Buildings and equipment, net | 50,778 | 39,114 | ||||
Total property and equipment | 61,578 | 49,914 | ||||
Total assets | $ | 85,798 | $ | 71,484 | ||
Liabilities and Stockholders' Equity | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 20,500 | $ | 18,400 | ||
Accrued liabilities | 1,010 | 730 | ||||
Notes payable, short term | 150 | 150 | ||||
Total current liabilities | 21,660 | 19,280 | ||||
Long-term liabilities: | ||||||
Bonds payable | 8,100 | 8,100 | ||||
Total liabilities | 29,760 | 27,380 | ||||
Stockholders' equity: | ||||||
Common stock | 600 | 600 | ||||
Additional paid-in capital | 4,000 | 4,000 | ||||
Total paid-in capital | 4,600 | 4,600 | ||||
Retained earnings | 51,438 | 39,504 | ||||
Total stockholders' equity | 56,038 | 44,104 | ||||
Total liabilities and stockholders' equity | $ | 85,798 | $ | 71,484 | ||
Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) | ||||||
This Year | Last Year | |||||
Sales | $ | 80,960 | $ | 66,000 | ||
Cost of goods sold | 42,660 | 34,000 | ||||
Gross margin | 38,300 | 32,000 | ||||
Selling and administrative expenses: | ||||||
Selling expenses | 10,800 | 10,500 | ||||
Administrative expenses | 6,400 | 6,000 | ||||
Total selling and administrative expenses | 17,200 | 16,500 | ||||
Net operating income | 21,100 | 15,500 | ||||
Interest expense | 810 | 810 | ||||
Net income before taxes | 20,290 | 14,690 | ||||
Income taxes | 8,116 | 5,876 | ||||
Net income | 12,174 | 8,814 | ||||
Dividends to common stockholders | 240 | 450 | ||||
Net income added to retained earnings | 11,934 | 8,364 | ||||
Beginning retained earnings | 39,504 | 31,140 | ||||
Ending retained earnings | $ | 51,438 | $ | 39,504 |
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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