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 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 companys common stock at the end of this year was $23. 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 | $ | 1,360 | ||
Accounts receivable, net | 11,000 | 7,100 | ||||
Inventory | 12,100 | 11,700 | ||||
Prepaid expenses | 730 | 660 | ||||
Total current assets | 24,930 | 20,820 | ||||
Property and equipment: | ||||||
Land | 9,300 | 9,300 | ||||
Buildings and equipment, net | 47,019 | 42,152 | ||||
Total property and equipment | 56,319 | 51,452 | ||||
Total assets | $ | 81,249 | $ | 72,272 | ||
Liabilities and Stockholders' Equity | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 18,900 | $ | 18,500 | ||
Accrued liabilities | 980 | 740 | ||||
Notes payable, short term | 270 | 270 | ||||
Total current liabilities | 20,150 | 19,510 | ||||
Long-term liabilities: | ||||||
Bonds payable | 9,300 | 9,300 | ||||
Total liabilities | 29,450 | 28,810 | ||||
Stockholders' equity: | ||||||
Common stock | 700 | 700 | ||||
Additional paid-in capital | 4,000 | 4,000 | ||||
Total paid-in capital | 4,700 | 4,700 | ||||
Retained earnings | 47,099 | 38,762 | ||||
Total stockholders' equity | 51,799 | 43,462 | ||||
Total liabilities and stockholders' equity | $ | 81,249 | $ | 72,272 | ||
Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) | ||||||
This Year | Last Year | |||||
Sales | $ | 74,000 | $ | 66,000 | ||
Cost of goods sold | 40,000 | 34,000 | ||||
Gross margin | 34,000 | 32,000 | ||||
Selling and administrative expenses: | ||||||
Selling expenses | 11,400 | 10,700 | ||||
Administrative expenses | 6,900 | 6,200 | ||||
Total selling and administrative expenses | 18,300 | 16,900 | ||||
Net operating income | 15,700 | 15,100 | ||||
Interest expense | 930 | 930 | ||||
Net income before taxes | 14,770 | 14,170 | ||||
Income taxes | 5,908 | 5,668 | ||||
Net income | 8,862 | 8,502 | ||||
Dividends to common stockholders | 525 | 280 | ||||
Net income added to retained earnings | 8,337 | 8,222 | ||||
Beginning retained earnings | 38,762 | 30,540 | ||||
Ending retained earnings | $ | 47,099 | $ | 38,762 | ||
Required:
Compute the following financial data and ratios for this year:
1. Working capital. (Enter your answer in thousands.)
2. Current ratio. (Round your answer to 2 decimal places.)
3. Acid-test ratio. (Round your answer to 2 decimal places.)
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