Exercise 14-3 (Algo) Financial Ratios for Asset Management (L014-3) 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 $29. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year $ 1,090 9,400 13,100 680 24, 270 $ 1,230 8,480 10,800 690 21, 120 10,700 47,013 57,713 $ 81,983 10,700 38,352 49,052 $ 70,172 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 $ 18,800 930 210 19,940 $ 17,700 700 210 18,610 8,800 28,740 8,800 27,410 700 4,000 4,700 48,543 53,243 $ 81,983 700 4,000 4,700 38,062 42,762 $ 70,172 Last Year $ 65,000 36,000 29,000 Weller Corporation Comparative Incone Statement and Reconciliation (dollars in thousands) This Year Sales $ 75,650 Cost of goods sold 39,435 Gross margin 36,215 Selling and administrative expenses Selling expenses 11,000 Administrative expenses 6,000 Total selling and administrative expenses 17.480 Net operating income 18,815 Interest expense 850 Net income before taxes 17,935 Income taxes 7.174 Net income 10,761 Dividends to conson stockholders 280 Niet Income added to retained earnings 10,481 Beginning retained earnings 38.062 Ending retained earnings $.48.54) 10,500 6,080 16. 5ee 12,500 880 11,620 4,648 6,972 350 6,622 31.440 $_38.062 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 calculations and final answer to 2 decimal places.) 5. Operating cycle. (Round your intermediate calculations and final answer to 2 decimal places.) 6. Total asset turnover (Round your answer to 2 decimal places.) 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 calculations and final answer to 2 decimal places.) 5. Operating cycle. (Round your intermediate calculations and final answer to 2 decimal places.) 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 cycle 6. Total asset turnover days days
