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 700,000 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 | $ | 1,160 | $ | 1,340 | ||
Accounts receivable, net | 9,900 | 7,800 | ||||
Inventory | 13,000 | 10,700 | ||||
Prepaid expenses | 670 | 540 | ||||
Total current assets | 24,730 | 20,380 | ||||
Property and equipment: | ||||||
Land | 10,400 | 10,400 | ||||
Buildings and equipment, net | 46,386 | 42,138 | ||||
Total property and equipment | 56,786 | 52,538 | ||||
Total assets | $ | 81,516 | $ | 72,918 | ||
Liabilities and Stockholders' Equity | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 20,200 | $ | 18,800 | ||
Accrued liabilities | 980 | 800 | ||||
Notes payable, short term | 180 | 180 | ||||
Total current liabilities | 21,360 | 19,780 | ||||
Long-term liabilities: | ||||||
Bonds payable | 8,200 | 8,200 | ||||
Total liabilities | 29,560 | 27,980 | ||||
Stockholders' equity: | ||||||
Common stock | 700 | 700 | ||||
Additional paid-in capital | 4,000 | 4,000 | ||||
Total paid-in capital | 4,700 | 4,700 | ||||
Retained earnings | 47,256 | 40,238 | ||||
Total stockholders' equity | 51,956 | 44,938 | ||||
Total liabilities and stockholders' equity | $ | 81,516 | $ | 72,918 | ||
Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) | ||||||
This Year | Last Year | |||||
Sales | $ | 72,000 | $ | 66,000 | ||
Cost of goods sold | 41,000 | 32,000 | ||||
Gross margin | 31,000 | 34,000 | ||||
Selling and administrative expenses: | ||||||
Selling expenses | 10,900 | 10,400 | ||||
Administrative expenses | 7,000 | 6,200 | ||||
Total selling and administrative expenses | 17,900 | 16,600 | ||||
Net operating income | 13,100 | 17,400 | ||||
Interest expense | 820 | 820 | ||||
Net income before taxes | 12,280 | 16,580 | ||||
Income taxes | 4,912 | 6,632 | ||||
Net income | 7,368 | 9,948 | ||||
Dividends to common stockholders | 350 | 350 | ||||
Net income added to retained earnings | 7,018 | 9,598 | ||||
Beginning retained earnings | 40,238 | 30,640 | ||||
Ending retained earnings | $ | 47,256 | $ | 40,238 | ||
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.)
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