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 $24. 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 | $ 1,290 |
Accounts receivable, net | 10,600 | 7,200 |
Inventory | 12,400 | 11,100 |
Prepaid expenses | 730 | 530 |
Total current assets | 24,980 | 20,120 |
Property and equipment: | ||
Land | 10,200 | 10,200 |
Buildings and equipment, net | 40,856 | 38,828 |
Total property and equipment | 51,056 | 49,028 |
Total assets | $ 76,036 | $ 69,148 |
Liabilities and Stockholders' Equity | ||
Current liabilities: | ||
Accounts payable | $ 19,000 | $ 19,300 |
Accrued liabilities | 1,000 | 880 |
Notes payable, short term | 190 | 190 |
Total current liabilities | 20,190 | 20,370 |
Long-term liabilities: | ||
Bonds payable | 8,700 | 8,700 |
Total liabilities | 28,890 | 29,070 |
Stockholders' equity: | ||
Common stock | 600 | 600 |
Additional paid-in capital | 4,000 | 4,000 |
Total paid-in capital | 4,600 | 4,600 |
Retained earnings | 42,546 | 35,478 |
Total stockholders' equity | 47,146 | 40,078 |
Total liabilities and stockholders' equity | $ 76,036 | $ 69,148 |
Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) | ||
---|---|---|
This Year | Last Year | |
Sales | $ 70,000 | $ 66,000 |
Cost of goods sold | 39,000 | 40,000 |
Gross margin | 31,000 | 26,000 |
Selling and administrative expenses: | ||
Selling expenses | 10,600 | 10,400 |
Administrative expenses | 7,000 | 6,600 |
Total selling and administrative expenses | 17,600 | 17,000 |
Net operating income | 13,400 | 9,000 |
Interest expense | 870 | 870 |
Net income before taxes | 12,530 | 8,130 |
Income taxes | 5,012 | 3,252 |
Net income | 7,518 | 4,878 |
Dividends to common stockholders | 450 | 240 |
Net income added to retained earnings | 7,068 | 4,638 |
Beginning retained earnings | 35,478 | 30,840 |
Ending retained earnings | $ 42,546 | $ 35,478 |
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