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 $26. All of the company's sales are on account Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year $ 1,170 10,000 12,400 750 24,320 $ 1,240 6,700 12,400 670 21,010 9,600 46,330 55,930 $ 80,250 9,600 42,390 51,990 $ 73,000 Assets Current asseto: Cash Necounts receivable, net Inventory Prepaid expenses Total current aspeto Property and equipment: Land Buildings and equipment, net Total property and equipment Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable Mccrued liabilities Notes payable, short term Total current liabilities Long-term liabilities Bonds payable Total liabilities Stockholdere' equity Common stock Additional paid-in capital Total paid-in capital Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 20,000 1,060 150 21,210 $ 19,200 840 150 20,190 9,500 30, 710 9,500 29,690 700 4,000 4,700 44,840 49,540 $ 80,250 700 4,000 4,700 38,610 43,310 $ 73,000 Last Year $ 66,000 34,000 32,000 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Sales $ 76,820 Cost of goods sold 47,120 Cross margin 29,700 Selling and administrative expenses Selling expenses 11,200 Administrative expenses 6,700 Total selling and administrative expenses 17,900 Net operating income 11,800 Interest expense 950 Net income before taxes 10,850 Income taxes 4,340 Net income 6,510 Dividends to common stockholders 280 Net income added to retained earnings 6,230 Beginning retained earnings 38,610 Ending retained earnings $ 44,840 10,500 6,600 17,100 14,900 950 13,950 5,580 8,370 700 7,670 30,940 $ 38,610 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 tumover days days
