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 the year was $22. All of the companys sales are on account.
Weller Corporation Comparative Balance Sheet (dollars in thousands) | ||||||
This Year | Last Year | |||||
Assets | ||||||
Current assets: | ||||||
Cash | $ | 1,210 | $ | 1,400 | ||
Accounts receivable, net | 9,800 | 7,800 | ||||
Inventory | 12,700 | 11,200 | ||||
Prepaid expenses | 770 | 590 | ||||
Total current assets | 24,480 | 20,990 | ||||
Property and equipment: | ||||||
Land | 10,500 | 10,500 | ||||
Buildings and equipment, net | 50,830 | 38,772 | ||||
Total property and equipment | 61,330 | 49,272 | ||||
Total assets | $ | 85,810 | $ | 70,262 | ||
Liabilities and Stockholders' Equity | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 18,700 | $ | 18,800 | ||
Accrued liabilities | 900 | 870 | ||||
Notes payable, short term | 250 | 250 | ||||
Total current liabilities | 19,850 | 19,920 | ||||
Long-term liabilities: | ||||||
Bonds payable | 9,800 | 9,800 | ||||
Total liabilities | 29,650 | 29,720 | ||||
Stockholders' equity: | ||||||
Common stock | 600 | 600 | ||||
Additional paid-in capital | 4,000 | 4,000 | ||||
Total paid-in capital | 4,600 | 4,600 | ||||
Retained earnings | 51,560 | 35,942 | ||||
Total stockholders' equity | 56,160 | 40,542 | ||||
Total liabilities and stockholders' equity | $ | 85,810 | $ | 70,262 | ||
Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) | ||||||
This Year | Last Year | |||||
Sales | $ | 80,960 | $ | 65,000 | ||
Cost of goods sold | 35,850 | 39,000 | ||||
Gross margin | 45,110 | 26,000 | ||||
Selling and administrative expenses: | ||||||
Selling expenses | 10,700 | 10,400 | ||||
Administrative expenses | 7,000 | 6,200 | ||||
Total selling and administrative expenses | 17,700 | 16,600 | ||||
Net operating income | 27,410 | 9,400 | ||||
Interest expense | 980 | 980 | ||||
Net income before taxes | 26,430 | 8,420 | ||||
Income taxes | 10,572 | 3,368 | ||||
Net income | 15,858 | 5,052 | ||||
Dividends to common stockholders | 240 | 450 | ||||
Net income added to retained earnings | 15,618 | 4,602 | ||||
Beginning retained earnings | 35,942 | 31,340 | ||||
Ending retained earnings | $ | 51,560 | $ | 35,942 | ||
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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