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 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 $25. All of the company's sales are on account eller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year Assets Current assets Cash $1,210 $ 1,310 Accounts receivable, net 9,400 7,000 Inventory 13,100 11,400 Prepaid expenses 660 670 Total current assets 26.370 20.30 Property and equipment: Land 9,700 9,700 Buildings and equipment, het 49.740 37.505 Total property and equipment 59.440 47.205 Total assets $83.810 67.5815 abilities and Stockholders Equity Current Habilities: Accounts payable $19,700 $ 17,600 Accrued liabilities 1.020 790 Notes payable, short ter 110 110 Total current liabilities 20,830 Long-term liabilities 18,500 Bonds payable 9.500 9.500 Total liabilities 30330 28,000 Stockholders' equity Common stock 700 700 Additional paid in capital 4,000 4.000 Total paid in capital Retained earnings 4.700 4,200 48,280 34,885 Total stockholders equity 53,480 39 585 Total liabilities and stockholders' equity $ 83,810 $67,585 Last Year $ 65,000 40.000 25,000 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Sales $ 77,900 Cost of goods sold 35, 525 Gross margin 427 Selling and administrative expenses Selling expenses 11.200 Administrative expenses 6.600 Total selling and administrative expenses 17. 300 Net operating income 24.575 Interest expense 950 Net Income before taxes 23,625 Income taxes 9,450 Net Income 14,175 Dividends to common stockholders 280 Net Income added to retained earnings 13,895 Beginning retained earnings 34,885 Ending retained earnings $ 48,780 10.600 6,500 17 100 7.900 950 6.950 2.780 4.170 525 3,645 31, 240 $ 34,885 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.) dayn 1 Accounts receivable turnover 2. Average collection period 3. Inventory turnover 4. Average sale period 5. Operating cycle 6 Total asset turnover days days
