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 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 | $ | 1,140 | $ | 1,400 | ||
Accounts receivable, net | 9,300 | 7,400 | ||||
Inventory | 12,800 | 10,800 | ||||
Prepaid expenses | 740 | 600 | ||||
Total current assets | 23,980 | 20,200 | ||||
Property and equipment: | ||||||
Land | 10,200 | 10,200 | ||||
Buildings and equipment, net | 44,446 | 41,793 | ||||
Total property and equipment | 54,646 | 51,993 | ||||
Total assets | $ | 78,626 | $ | 72,193 | ||
Liabilities and Stockholders' Equity | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 20,400 | $ | 18,400 | ||
Accrued liabilities | 1,060 | 710 | ||||
Notes payable, short term | 220 | 220 | ||||
Total current liabilities | 21,680 | 19,330 | ||||
Long-term liabilities: | ||||||
Bonds payable | 8,200 | 8,200 | ||||
Total liabilities | 29,880 | 27,530 | ||||
Stockholders' equity: | ||||||
Common stock | 700 | 700 | ||||
Additional paid-in capital | 4,000 | 4,000 | ||||
Total paid-in capital | 4,700 | 4,700 | ||||
Retained earnings | 44,046 | 39,963 | ||||
Total stockholders' equity | 48,746 | 44,663 | ||||
Total liabilities and stockholders' equity | $ | 78,626 | $ | 72,193 | ||
Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) | ||||||
This Year | Last Year | |||||
Sales | $ | 66,000 | $ | 66,000 | ||
Cost of goods sold | 40,000 | 33,000 | ||||
Gross margin | 26,000 | 33,000 | ||||
Selling and administrative expenses: | ||||||
Selling expenses | 10,700 | 10,300 | ||||
Administrative expenses | 6,800 | 6,800 | ||||
Total selling and administrative expenses | 17,500 | 17,100 | ||||
Net operating income | 8,500 | 15,900 | ||||
Interest expense | 820 | 820 | ||||
Net income before taxes | 7,680 | 15,080 | ||||
Income taxes | 3,072 | 6,032 | ||||
Net income | 4,608 | 9,048 | ||||
Dividends to common stockholders | 525 | 525 | ||||
Net income added to retained earnings | 4,083 | 8,523 | ||||
Beginning retained earnings | 39,963 | 31,440 | ||||
Ending retained earnings | $ | 44,046 | $ | 39,963 | ||
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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