Exercise 14-2 (Algo) Financial Ratios for Assessing Liquidity [LO14-2] 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 last year and $0.40 this year. The market value of the company's common stock at the end of this year was $23. All of the company's sales are on account. Weller Corporation. Comparative Balance Sheet (dollars in thousands) 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 This Year Last Year $1,080 10,900 13,000 640 $1,330 7,000 12,200 560 25,620 21,090 10,000 10,000 45,577 40,326 55,577 50,326 $ 81,197 $ 71,416 $19,400 940 130 $19,400 720 130 20,470 20,250 9,900 38, 370 9,900 30,150 700 700 4,000 4,000 4,700 4,700 46,127 16,566 50,827 41,266 $ 1,197 $ 21,416 STOCKNGrs equity: Common stock Additional paid-in capital Total paid-in capital Retained earnings Total stockholders' equity Total liabilities and stockholders' equity Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) 700 700 4,000 4,000 4,700 4,700 46,127 36,566 50,827 41,266 $ 81,197 $ 71,416 This Year Last Year Sales $ 70,000 Cost of goods sold 34,000 $ 65,000 38,000 Gross margin 36,000 27,000 Selling and administrative expenses: Selling expenses 11,400 10,300 Administrative expenses 6,800 6,200 Total selling and administrative expenses 18,200 16,500 Net operating income 17,800 10,500 Interest expense 990 998 Net income before taxes 16,810 9,510 6,724 3,804 10,086 5,706 525 288 Income taxes Net income Dividends to common stockholders Net income added to retained earnings Beginning retained earnings Ending retained earnings 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.) 1. Working capital 2. Current ratio 3. Acid-test ratio 9,561 36,566 $ 46,127 5,426 31,140 $ 36,566