Exercise 14-2 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 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 the year was $29. All of the company's sales are on account Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year $ 1,230 10,600 13,000 680 25,510 $ 1,270 8,400 12,400 590 22,660 10,700 43,236 53,936 $ 79,446 10,700 34,358 45,058 $67, 718 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 $20,300 1,060 110 21, 470 $18,700 890 110 19,700 8,700 30, 170 8.700 28,400 500 4,000 4,500 44,776 49,276 $ 79,446 500 4,000 4,500 34,818 39,318 $67,718 Last Year $65,000 39,000 26,000 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Sales $69,000 Cost of goods sold 33,000 Gross margin 36,000 Selling and administrative expenses: Selling expenses 11,000 Administrative expenses 6,700 Total selling and administrative expenses 17,700 Net operating income 18,300 Interest expense 870 Net income before taxes 17,430 Income taxes 6,972 Net income 10,458 Dividends to common stockholders 500 Net income added to retained earnings 9,958 Beginning retained earnings 34,818 Ending retained earnings $ 44,776 10,700 6,800 17,500 8,500 870 7,630 3,052 4,578 500 4,078 30,740 $ 34,818 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
