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 bonds, which were sold at their face value, 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 | $ | 1,100 | $ | 1,380 | ||
Accounts receivable, net | 9,300 | 7,100 | ||||
Inventory | 12,700 | 10,800 | ||||
Prepaid expenses | 780 | 690 | ||||
Total current assets | 23,880 | 19,970 | ||||
Property and equipment: | ||||||
Land | 9,400 | 9,400 | ||||
Buildings and equipment, net | 44,496 | 39,138 | ||||
Total property and equipment | 53,896 | 48,538 | ||||
Total assets | $ | 77,776 | $ | 68,508 | ||
Liabilities and Stockholders' Equity | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 18,800 | $ | 18,000 | ||
Accrued liabilities | 1,090 | 830 | ||||
Notes payable, short term | 300 | 300 | ||||
Total current liabilities | 20,190 | 19,130 | ||||
Long-term liabilities: | ||||||
Bonds payable | 8,200 | 8,200 | ||||
Total liabilities | 28,390 | 27,330 | ||||
Stockholders' equity: | ||||||
Common stock | 600 | 600 | ||||
Additional paid-in capital | 4,000 | 4,000 | ||||
Total paid-in capital | 4,600 | 4,600 | ||||
Retained earnings | 44,786 | 36,578 | ||||
Total stockholders' equity | 49,386 | 41,178 | ||||
Total liabilities and stockholders' equity | $ | 77,776 | $ | 68,508 | ||
Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) | ||||||
This Year | Last Year | |||||
Sales | $ | 70,000 | $ | 64,000 | ||
Cost of goods sold | 38,000 | 36,000 | ||||
Gross margin | 32,000 | 28,000 | ||||
Selling and administrative expenses: | ||||||
Selling expenses | 10,500 | 11,000 | ||||
Administrative expenses | 6,600 | 6,200 | ||||
Total selling and administrative expenses | 17,100 | 17,200 | ||||
Net operating income | 14,900 | 10,800 | ||||
Interest expense | 820 | 820 | ||||
Net income before taxes | 14,080 | 9,980 | ||||
Income taxes | 5,632 | 3,992 | ||||
Net income | 8,448 | 5,988 | ||||
Dividends to common stockholders | 240 | 450 | ||||
Net income added to retained earnings | 8,208 | 5,538 | ||||
Beginning retained earnings | 36,578 | 31,040 | ||||
Ending retained earnings | $ | 44,786 | $ | 36,578 | ||
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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