Exercise $16-2($Algo$)$ Financial Ratios for Assessing Liquidity $[$LO$16-2]$

Comparative financial statements for Weller Corporation, a merchandising company, for the year ending December $31$ appear below. The company did not issue any 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 $$0\mathrm{.}75$ last year and $$0\mathrm{.}40$ this year. The market value of the company$$s common stock at the end of this year was $$20.$ All of the company$$s sales are on account.

Weller Corporation

Comparative Balance Sheet

$($dollars in thousands$)$

This Year Last Year

Assets

Current assets:

Cash $ $1,090$ $ $1,410$

Accounts receivable, net $10,5007,600$

Inventory $13,80011,400$

Prepaid expenses $740630$

Total current assets $26,13021,040$

Property and equipment:

Land $10,00010,000$

Buildings and equipment, net $41,50639,868$

Total property and equipment $51,50649,868$

Total assets $ $77,636$ $ $70,908$

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable $ $19,900$ $ $19,300$

Accrued liabilities $920840$

Notes payable, short term $170170$

Total current liabilities $20,99020,310$

Long$-$term liabilities:

Bonds payable $9,7009,700$

Total liabilities $30,69030,010$

Stockholders' equity:

Common stock $600600$

Additional paid$-$in capital $4,0004,000$

Total paid$-$in capital $4,6004,600$

Retained earnings $42,34636,298$

Total stockholders' equity $46,94640,898$

Total liabilities and stockholders' equity $ $77,636$ $ $70,908$

Weller Corporation

Comparative Income Statement and Reconciliation

$($dollars in thousands$)$

This Year Last Year

Sales $ $67,000$ $ $65,000$

Cost of goods sold $37,00038,000$

Gross margin $30,00027,000$

Selling and administrative expenses:

Selling expenses $11,50010,700$

Administrative expenses $6,7006,500$

Total selling and administrative expenses $18,20017,200$

Net operating income $11,8009,800$

Interest expense $970970$

Net income before taxes $10,8308,830$

Income taxes $4,3323,532$

Net income $6,4985,298$

Dividends to common stockholders $450240$

Net income added to retained earnings $6,0485,058$

Beginning retained earnings $36,29831,240$

Ending retained earnings $ $42,346$ $ $36,298$

Required:

Compute the following financial data and ratios for this year:

Working capital.

Note: Enter your answer in thousands.

Current ratio.

Note: Round your answer to $2$ decimal places.

Acid$-$test ratio.

Note: Round your answer to $2$ decimal places.Exercise $16-2($Algo$)$ Financial Ratios for Assessing Liquidity $[$LO$16-2]$

points

Comparative financial statements for Weller Corporation, a merchandising company, for the year ending December $31$ appear below.

The company did not issue any 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\mathrm{.}75$ last

year and $$0\mathrm{.}40$ this year. The market value of the company's common stock at the end of this year was $$20.$ All of the company's sales

are on account.

Weller Corporation

Comparative Balance Sheet

$($dollars in thousands$)$

This Year Last Year

Assets

Current assets:

Cash

$$1,090$$$1,410$

Inventory $10,500,7,600$

Total current asset

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

Required:

Compute the following financial data and ratios for this year:

Working capital.

Note: Enter your answer in thousands.

Current ratio.

Note: Round your answer to $2$ decimal places.

Acid$-$test ratio.

Note: Round your answer to $2$ decimal places.