Exercise 14-3 (Algo) Financial Ratios for Asset Management [LO14-3] 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 600,000 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 $30. 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 This Year Last Year $ 1,140 10,400 12,200 $ 1,280 7,300 10,800. 710 700 24,450 20,080 10,700 10,700 51,832 42,014 62,532 52,714 $ 86,982 $ 72,794 $ 19,700 1,020 120 $ 18,500 800 20,840 120 19,420 8,600 29,440 8,600 28,020 600 600 Stockholders' equity: Common stock Additional paid-in capital Total paid-in capital Retained earnings Total stockholders' equity 600 600 4,000 4,000 4,600 4,600 52,942 40,174 57,542 44,774 $ 86,982 $ 72,794 Total liabilities and stockholders' equity Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) Sales Cost of goods sold Gross margin Selling and administrative expenses: Selling expenses Administrative expenses Total selling and administrative expenses Net operating income Interest expense Net income before taxes. Income taxes Net income This Year Last Year $ 83,190 $ 65,000 42,550 32,000 40,640 33,000 10,800 10,400 7,300 6,100 18,100 16,500 22,540 16,500 860 860 21,680 15,640 8,672 6,256 13,008 240 Dividends to common stockholders Net income added to retained earnings Beginning retained earnings Ending retained earnings 12,768 40,174 $ 52,942 9,384 450 8,934 31,240 $ 40,174 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.) 1. Accounts receivable turnover 2. Average collection period 3. Inventory turnover 4. Average sale period 5. Operating cycle 6. Total asset turnover days days days