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 $21. All of the company's sales are on account. This Year Last Year $ 1,140 10,800 13,600 710 26,250 $ 1,400 7.900 11,300 530 21,130 Weller Corporation Comparative Balance Sheet (dollars in thousanda) 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 Bonda payable Total liabilities 10,000 48,083 58,083 $ 84,333 10,000 41,082 51,082 $ 72,212 $ 20,400 980 280 21,660 $ 18,900 730 280 19,910 9300 30,960 9 300 29,210 Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year $ 1,140 10,800 13,600 710 26,250 $ 1,400 7,900 11,300 530 21,130 10,000 48,083 58,083 $ 84333 10,000 41,082 51,082 $ 72,212 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 $ 20,400 980 280 21,660 $ 18,900 730 280 19,910 9,300 30,960 9,300 29,210 600 4,000 4,600 48,773 53,373 $ 84,333 600 4,000 4,600 38,402 43,002 $ 72,212 Weller Corporation Comparative Income Statement and Panama Last Year $ 64,000 33,000 31,000 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Sales $ 82,280 Cost of goods sold 46,065 Gross margin 36,215 Selling and administrative expenses Selling expenses 11,000 Administrative expenses 6,600 Total selling and administrative expenses 17,600 Net operating income 18, 615 Interest expense 930 Net income before taxes 17,685 Income taxes 7,074 Net income 10,611 Dividends to common stockholders 240 Net income added to retained earnings 10,371 Beginning retained earnings 38,402 Ending retained earnings $ 48,773 10,900 6,900 17,800 13,200 930 12,270 4,908 7,362 300 7,062 31, 340 $ 38, 402 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.) Net income added to retained earnings Beginning retained earnings Ending retained earnings 10,371 38,402 $ 48,773 7,062 31,340 $ 38, 402 ugh 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.) Answer is complete but not entirely correct. 1. Accounts receivable turnover 9,350.00 2. Average collection period 40.00 days 3. Inventory turnover 12,450.00 4. Average sale period 98.00 days 5. Operating cycle 138.00 days 6. Total asset turnover 1.05