EC2 Q2
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 company's common stock at the end of this year was $26. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year $ 1,130 10,900 13,100 730 25,860_ $ 1,270 8,400 11,000 600 21, 270 10,500 51,952 62,452 $88,312 10,500 37,854 48, 354 $69,624 Assets Current assets: Cash Accounts receivable, net Inventory Prepaid expenses Total current assets Property and equipment: Land Buildings and equipment, net Total property and equipment Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable Accrued liabilities Notes payable, short term Total current liabilities Long-term liabilities: Bonds payable Total liabilities Stockholders' equity: Common stock Additional paid-in capital Total paid-in capital Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $19,100 1,020 280 20,400 $18,700 780 280 19,760 9,600 30,000 9,600 29,360 600 4,000 4,600 53,712 58,312 $88, 312 600 4,000 4,600 35, 664 40, 264 $69,624 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year Sales $90,710 $66,000 Cost of goods sold 40,970 40,000 Gross margin 49,740 26,000 Selling and administrative expenses: Selling expenses 11,100 10,400 Administrative expenses 7,2006 ,100 Total selling and administrative expenses 18,300 16,500 Net operating income 31,440 9,500 Interest expense 960 960 Net income before taxes 30,480 8,540 Income taxes 12,192 3,416 Net income 18,288 5,124 Dividends to common stockholders 240 600 Net income added to retained earnings 18,048 4,524 Beginning retained earnings 35,664 31,140 Ending retained earnings $53,712 $35,664 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.) days 1. Accounts receivable turnover 2. Average collection period 3. Inventory turnover 4. Average sale period 5. Operating cycle 6. Total asset turnover days days
