Question
Comparative financial statements for Weller Corporation, a merchandising company, for the fiscal year ending December 31 appear below. The company did not issue any new
Comparative financial statements for Weller Corporation, a merchandising company, for the fiscal 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 $1.00. 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 | $ | 1,150 | $ | 1,340 | ||
Accounts receivable, net | 10,600 | 7,800 | ||||
Inventory | 12,300 | 12,400 | ||||
Prepaid expenses | 620 | 690 | ||||
Total current assets | 24,670 | 22,230 | ||||
Property and equipment: | ||||||
Land | 9,600 | 9,600 | ||||
Buildings and equipment, net | 49,364 | 33,682 | ||||
Total property and equipment | 58,964 | 43,282 | ||||
Total assets | $ | 83,634 | $ | 65,512 | ||
Liabilities and Stockholders' Equity | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 19,000 | $ | 17,500 | ||
Accrued liabilities | 960 | 760 | ||||
Notes payable, short term | 250 | 250 | ||||
Total current liabilities | 20,210 | 18,510 | ||||
Long-term liabilities: | ||||||
Bonds payable | 8,300 | 8,300 | ||||
Total liabilities | 28,510 | 26,810 | ||||
Stockholders' equity: | ||||||
Common stock | 600 | 600 | ||||
Additional paid-in capital | 4,000 | 4,000 | ||||
Total paid-in capital | 4,600 | 4,600 | ||||
Retained earnings | 50,524 | 34,102 | ||||
Total stockholders' equity | 55,124 | 38,702 | ||||
Total liabilities and stockholders' equity | $ | 83,634 | $ | 65,512 | ||
Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) | ||||||
This Year | Last Year | |||||
Sales | $ | 81,880 | $ | 65,000 | ||
Cost of goods sold | 34,580 | 41,000 | ||||
Gross margin | 47,300 | 24,000 | ||||
Selling and administrative expenses: | ||||||
Selling expenses | 10,900 | 10,700 | ||||
Administrative expenses | 7,200 | 6,200 | ||||
Total selling and administrative expenses | 18,100 | 16,900 | ||||
Net operating income | 29,200 | 7,100 | ||||
Interest expense | 830 | 830 | ||||
Net income before taxes | 28,370 | 6,270 | ||||
Income taxes | 11,348 | 2,508 | ||||
Net income | 17,022 | 3,762 | ||||
Dividends to common stockholders | 600 | 600 | ||||
Net income added to retained earnings | 16,422 | 3,162 | ||||
Beginning retained earnings | 34,102 | 30,940 | ||||
Ending retained earnings | $ | 50,524 | $ | 34,102 | ||
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.) |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started