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 $24. All of the companys sales are on account.
Weller Corporation Comparative Balance Sheet (dollars in thousands) | ||
This Year | Last Year | |
---|---|---|
Assets | ||
Current assets: | ||
Cash | $ 1,200 | $ 1,320 |
Accounts receivable, net | 9,900 | 6,800 |
Inventory | 12,200 | 11,000 |
Prepaid expenses | 790 | 670 |
Total current assets | 24,090 | 19,790 |
Property and equipment: | ||
Land | 9,500 | 9,500 |
Buildings and equipment, net | 46,188 | 38,824 |
Total property and equipment | 55,688 | 48,324 |
Total assets | $ 79,778 | $ 68,114 |
Liabilities and Stockholders' Equity | ||
Current liabilities: | ||
Accounts payable | $ 20,200 | $ 17,900 |
Accrued liabilities | 910 | 720 |
Notes payable, short term | 170 | 170 |
Total current liabilities | 21,280 | 18,790 |
Long-term liabilities: | ||
Bonds payable | 8,600 | 8,600 |
Total liabilities | 29,880 | 27,390 |
Stockholders' equity: | ||
Common stock | 600 | 600 |
Additional paid-in capital | 4,000 | 4,000 |
Total paid-in capital | 4,600 | 4,600 |
Retained earnings | 45,298 | 36,124 |
Total stockholders' equity | 49,898 | 40,724 |
Total liabilities and stockholders' equity | $ 79,778 | $ 68,114 |
Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) | ||
This Year | Last Year | |
---|---|---|
Sales | $ 71,000 | $ 65,000 |
Cost of goods sold | 36,000 | 39,000 |
Gross margin | 35,000 | 26,000 |
Selling and administrative expenses: | ||
Selling expenses | 11,400 | 10,300 |
Administrative expenses | 6,700 | 6,800 |
Total selling and administrative expenses | 18,100 | 17,100 |
Net operating income | 16,900 | 8,900 |
Interest expense | 860 | 860 |
Net income before taxes | 16,040 | 8,040 |
Income taxes | 6,416 | 3,216 |
Net income | 9,624 | 4,824 |
Dividends to common stockholders | 450 | 240 |
Net income added to retained earnings | 9,174 | 4,584 |
Beginning retained earnings | 36,124 | 31,540 |
Ending retained earnings | $ 45,298 | $ 36,124 |
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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