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 $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 | $ 1,250 | $ 1,240 |
Accounts receivable, net | 9,100 | 7,300 |
Inventory | 12,400 | 12,500 |
Prepaid expenses | 800 | 530 |
Total current assets | 23,550 | 21,570 |
Property and equipment: | ||
Land | 9,800 | 9,800 |
Buildings and equipment, net | 50,183 | 39,773 |
Total property and equipment | 59,983 | 49,573 |
Total assets | $ 83,533 | $ 71,143 |
Liabilities and Stockholders' Equity | ||
Current liabilities: | ||
Accounts payable | $ 20,300 | $ 18,300 |
Accrued liabilities | 1,000 | 820 |
Notes payable, short term | 300 | 300 |
Total current liabilities | 21,600 | 19,420 |
Long-term liabilities: | ||
Bonds payable | 8,700 | 8,700 |
Total liabilities | 30,300 | 28,120 |
Stockholders' equity: | ||
Common stock | 500 | 500 |
Additional paid-in capital | 4,000 | 4,000 |
Total paid-in capital | 4,500 | 4,500 |
Retained earnings | 48,733 | 38,523 |
Total stockholders' equity | 53,233 | 43,023 |
Total liabilities and stockholders' equity | $ 83,533 | $ 71,143 |
Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) | ||
This Year | Last Year | |
---|---|---|
Sales | $ 76,260 | $ 65,000 |
Cost of goods sold | 39,840 | 33,000 |
Gross margin | 36,420 | 32,000 |
Selling and administrative expenses: | ||
Selling expenses | 11,100 | 10,900 |
Administrative expenses | 7,100 | 6,800 |
Total selling and administrative expenses | 18,200 | 17,700 |
Net operating income | 18,220 | 14,300 |
Interest expense | 870 | 870 |
Net income before taxes | 17,350 | 13,430 |
Income taxes | 6,940 | 5,372 |
Net income | 10,410 | 8,058 |
Dividends to common stockholders | 200 | 375 |
Net income added to retained earnings | 10,210 | 7,683 |
Beginning retained earnings | 38,523 | 30,840 |
Ending retained earnings | $ 48,733 | $ 38,523 |
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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