Exercise 14-3 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 the year was $25. All of the company's sales are on account Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year $ 1,120 9,800 12,300 730 23,950 $ 1,240 7,700 12,000 550 21,490 9,500 46,640 56,140 $80,090 9,500 36,779 46.279 $67,769 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 $20,300 910 170 21,380 $17,800 700 170 18,670 8,600 29,980 8,600 27,270 700 4.000 4,700 45.410 50, 110 $80,090 700 4,000 4,700 35,299 40,499 $67, 769 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year Sales $80,500 $66,000 Cost of goods sola 44,955 40,000 Gross margin 35,545 26,000 Selling and administrative expenses : Selling expenses 11,400 10,600 Administrative expenses 6,800 6,400 Total selling and administrative expenses 18,200 17,000 Net operating income 17,345 9,000 Interest expense 860 860 Net income before taxes 16,485 8,140 Income taxes 6,594 3,256 Net income 9,891 4,884 Dividends to common stockholders 280 525 Net Income added to retained earnings 9,611 4,359 Beginning retained earnings 35, 799 31,440 Ending retained earnings $45,410 $35,799 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. 5.80 X 2 days 3. Accounts receivable turnover Average collection period Inventory turnover Average sale period Operating cycle Total asset turnover 4. 63.00 2.50 X 363.00 208.00 X 1.01 X days 5. days 6