Exercise 14-2 (Algo) Financial Ratios for Assessing Liquidity (L014-2) 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 lost year and $0.40 this year. The market value of the company's common stock at the end of this year was $22. All of the company's sales are on account Meller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year $ 1,210 10,400 13,000 610 25,220 51,240 6,800 12,300 590 20.930 tes 10,400 44,537 54,937 $0,157 10,400 39.946 50.346 5 71,276 Assets Current 3.netst Cash Accounts receivable, not 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: Mecounts payable Accrued liabilities Notes payable short term Total current liabilities Long-term liabilities Bonds payable Total abilities Stockholders' equity Common stock Ndditional paid in capital Total paid in capital Tetained earnings Total stockholders equity Total liabilities and stockholders' quity $ 20,000 970 200 21,170 $ 18,700 850 200 19,750 9.900 31,070 9,900 29.650 700 4,000 4,700 66.202 49.082 530,152 700 4.000 1,700 36, 926 42.626 $71,276 Weller Corporation Comparatie In Statement and en Last Year $ 66,000 39,000 27,000 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Sales $ 70,000 Cost of goods sold 38,000 Gross margin 32,000 Selling and administrative expenses : Selling expenses 10,700 Administrative expenses 7,000 Total selling and administrative expenses 17,700 Net operating income 14,300 Interest expense 990 Net income before taxes 13,310 Income taxes 5,324 Net income 7,986 Dividends to common stockholders 525 Net income added to retained earnings 7.461 Beginning retained earnings 36,926 Ending retained earnings $ 44,387 10,000 6,400 16,400 10,600 990 9,610 3,844 5,766 280 5,486 31,440 $ 36,926 tes $ 40,743 $36,260 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 citiculations and final car to 2 decimal places.) 5. Operating cycle. (Round your intermediate calculations and final answer to 2 decimal place 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 cyclo 6. Total asset turnover days days
