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 $21. All of the companys sales are on account.
Weller Corporation Comparative Balance Sheet (dollars in thousands) | ||||||
This Year | Last Year | |||||
Assets | ||||||
Current assets: | ||||||
Cash | $ | 1,120 | $ | 1,260 | ||
Accounts receivable, net | 10,800 | 8,300 | ||||
Inventory | 13,800 | 11,700 | ||||
Prepaid expenses | 670 | 580 | ||||
Total current assets | 26,390 | 21,840 | ||||
Property and equipment: | ||||||
Land | 9,500 | 9,500 | ||||
Buildings and equipment, net | 49,836 | 39,279 | ||||
Total property and equipment | 59,336 | 48,779 | ||||
Total assets | $ | 85,726 | $ | 70,619 | ||
Liabilities and Stockholders' Equity | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 19,900 | $ | 18,000 | ||
Accrued liabilities | 1,000 | 800 | ||||
Notes payable, short term | 300 | 300 | ||||
Total current liabilities | 21,200 | 19,100 | ||||
Long-term liabilities: | ||||||
Bonds payable | 8,600 | 8,600 | ||||
Total liabilities | 29,800 | 27,700 | ||||
Stockholders' equity: | ||||||
Common stock | 700 | 700 | ||||
Additional paid-in capital | 4,000 | 4,000 | ||||
Total paid-in capital | 4,700 | 4,700 | ||||
Retained earnings | 51,226 | 38,219 | ||||
Total stockholders' equity | 55,926 | 42,919 | ||||
Total liabilities and stockholders' equity | $ | 85,726 | $ | 70,619 | ||
Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) | ||||||
This Year | Last Year | |||||
Sales | $ | 86,905 | $ | 65,000 | ||
Cost of goods sold | 45,900 | 35,000 | ||||
Gross margin | 41,005 | 30,000 | ||||
Selling and administrative expenses: | ||||||
Selling expenses | 11,100 | 10,700 | ||||
Administrative expenses | 6,900 | 6,100 | ||||
Total selling and administrative expenses | 18,000 | 16,800 | ||||
Net operating income | 23,005 | 13,200 | ||||
Interest expense | 860 | 860 | ||||
Net income before taxes | 22,145 | 12,340 | ||||
Income taxes | 8,858 | 4,936 | ||||
Net income | 13,287 | 7,404 | ||||
Dividends to common stockholders | 280 | 525 | ||||
Net income added to retained earnings | 13,007 | 6,879 | ||||
Beginning retained earnings | 38,219 | 31,340 | ||||
Ending retained earnings | $ | 51,226 | $ | 38,219 | ||
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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