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 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 $0.75 last year and $0.40 this year. The market value of the companys common stock at the end of this year was $26. All of the companys sales are on account.
Weller Corporation Comparative Balance Sheet (dollars in thousands) | ||
This Year | Last Year | |
---|---|---|
Assets | ||
Current assets: | ||
Cash | $ 1,190 | $ 1,220 |
Accounts receivable, net | 10,000 | 7,100 |
Inventory | 14,000 | 11,100 |
Prepaid expenses | 620 | 530 |
Total current assets | 25,810 | 19,950 |
Property and equipment: | ||
Land | 10,100 | 10,100 |
Buildings and equipment, net | 42,151 | 36,850 |
Total property and equipment | 52,251 | 46,950 |
Total assets | $ 78,061 | $ 66,900 |
Liabilities and Stockholders' Equity | ||
Current liabilities: | ||
Accounts payable | $ 20,200 | $ 18,900 |
Accrued liabilities | 960 | 870 |
Notes payable, short term | 190 | 190 |
Total current liabilities | 21,350 | 19,960 |
Long-term liabilities: | ||
Bonds payable | 8,500 | 8,500 |
Total liabilities | 29,850 | 28,460 |
Stockholders' equity: | ||
Common stock | 600 | 600 |
Additional paid-in capital | 4,000 | 4,000 |
Total paid-in capital | 4,600 | 4,600 |
Retained earnings | 43,611 | 33,840 |
Total stockholders' equity | 48,211 | 38,440 |
Total liabilities and stockholders' equity | $ 78,061 | $ 66,900 |
Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) | ||
This Year | Last Year | |
---|---|---|
Sales | $ 76,095 | $ 65,000 |
Cost of goods sold | 40,160 | 42,000 |
Gross margin | 35,935 | 23,000 |
Selling and administrative expenses: | ||
Selling expenses | 11,500 | 10,500 |
Administrative expenses | 6,900 | 6,400 |
Total selling and administrative expenses | 18,400 | 16,900 |
Net operating income | 17,535 | 6,100 |
Interest expense | 850 | 850 |
Net income before taxes | 16,685 | 5,250 |
Income taxes | 6,674 | 2,100 |
Net income | 10,011 | 3,150 |
Dividends to common stockholders | 240 | 450 |
Net income added to retained earnings | 9,771 | 2,700 |
Beginning retained earnings | 33,840 | 31,140 |
Ending retained earnings | $ 43,611 | $ 33,840 |
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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