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 500,000 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 $25. All of the companys sales are on account.
Weller Corporation Comparative Balance Sheet (dollars in thousands) | ||
This Year | Last Year | |
---|---|---|
Assets | ||
Current assets: | ||
Cash | $ 1,230 | $ 1,270 |
Accounts receivable, net | 10,800 | 6,900 |
Inventory | 12,300 | 10,700 |
Prepaid expenses | 700 | 560 |
Total current assets | 25,030 | 19,430 |
Property and equipment: | ||
Land | 10,300 | 10,300 |
Buildings and equipment, net | 50,820 | 40,273 |
Total property and equipment | 61,120 | 50,573 |
Total assets | $ 86,150 | $ 70,003 |
Liabilities and Stockholders' Equity | ||
Current liabilities: | ||
Accounts payable | $ 19,700 | $ 18,000 |
Accrued liabilities | 950 | 790 |
Notes payable, short term | 210 | 210 |
Total current liabilities | 20,860 | 19,000 |
Long-term liabilities: | ||
Bonds payable | 8,700 | 8,700 |
Total liabilities | 29,560 | 27,700 |
Stockholders' equity: | ||
Common stock | 500 | 500 |
Additional paid-in capital | 4,000 | 4,000 |
Total paid-in capital | 4,500 | 4,500 |
Retained earnings | 52,090 | 37,803 |
Total stockholders' equity | 56,590 | 42,303 |
Total liabilities and stockholders' equity | $ 86,150 | $ 70,003 |
Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) | ||
This Year | Last Year | |
---|---|---|
Sales | $ 78,765 | $ 64,000 |
Cost of goods sold | 35,650 | 35,000 |
Gross margin | 43,115 | 29,000 |
Selling and administrative expenses: | ||
Selling expenses | 11,200 | 10,700 |
Administrative expenses | 6,900 | 6,200 |
Total selling and administrative expenses | 18,100 | 16,900 |
Net operating income | 25,015 | 12,100 |
Interest expense | 870 | 870 |
Net income before taxes | 24,145 | 11,230 |
Income taxes | 9,658 | 4,492 |
Net income | 14,487 | 6,738 |
Dividends to common stockholders | 200 | 375 |
Net income added to retained earnings | 14,287 | 6,363 |
Beginning retained earnings | 37,803 | 31,440 |
Ending retained earnings | $ 52,090 | $ 37,803 |
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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