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 500,000 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 $24. 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: This Year Last Year $1,090 $ 1,320 9,900 12,300 730 7,400 10,700 520 24,020 19,940 9,900 9,900 46,271 36,558 56,171 46,458 $ 80,191 $ 66,398 $19,400 910 $18,600 730 240 240 20,550 19,570 8,200 8,2001 28,750 27,770 28,750 27,770 500 500 4,000 4,000 4,500 4,500 46,941 34,128 51,441 38,628 $ 80,191 $ 66,398 Total liabilities Stockholders' equity: Common stock Additional paid-in capital Total paid-in capital Retained earnings Total stockholders' equity Total liabilities and stockholders' equity Weller Corporation (dollars in thousands) Comparative Income Statement and Reconciliation This Year Last Year Sales $ 73,000 $ 66,000 Cost of goods sold 33,000 42,000 Gross margin 40,000 24,000 Selling and administrative expenses: Selling expenses 10,700 10,400 Administrative expenses 6,500 Total selling and administrative expenses 6,800 17,200 17,200 Net operating income 22,800 Interest expense 6,800 820 820 Net income before taxes Income taxes Net income 21,980 8,792 13,188 5,980 2,392 3,588 375 200 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.) 12,813 34,128 $ 46,941 3,388 30,740 $ 34,128 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