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 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 the year was $21. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year 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 $ 1,220 9,800 12,50 610 24,130 $ 1,290 6,600 10,900 700 19, 490 10,100 50, e7e 60,17e $84,300 10.100 41, 192 51,292 $70,782 Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year $ 1,220 9,800 12,500 610 24,130 $ 1,290 6,600 10,900 700 19,490 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 1-2-1 10,100 50,070 60,170 $84,300 10,100 41,192 51,292 $70,782 $18,600 940 13e 19,670 $18,500 830 13e 19,460 8,300 27,970 8,300 27,760 600 60e Stockholders' equity: Common stock Additional paid-in capital Total paid-in capital Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 600 4,000 4,600 51,730 56,330 $84,300 600 4,000 4,600 38,422 43,022 $70,782 Last Year $65,000 34,000 31,000 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Sales $75,440 Cost of goods sold 33,930 Gross margin 41,510 Selling and administrative expenses: Selling expenses 11,500 Administrative expenses 6,600 Total selling and administrative expenses 18, 100 Net operating income 23,410 Interest expense 830 Net income before taxes 22,580 Income taxes 9,032 Net income 13,548 Dividends to common stockholders 24e Net income added to retained earnings 13,308 11,000 6,700 17,700 13,300 830 12,47e 4,988 7,482 6ee 6,882 Check 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 Dividends to common stockholders Net income added to retained earnings Beginning retained earnings Ending retained earnings 11,500 6,600 18,180 23,410 830 22,580 9,032 13,548 240 13,308 38,422 $51,730 11,000 6,700 17,700 13,300 830 12,470 4,988 7,482 600 6,882 31,540 $38, 422 c01 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 deci 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 p 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 Total asset turnover days days 6 Check my work Exercise 14-5 Financial Ratios for Assessing Profitability (L014-5) 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 930,000 shares of common stock were outstanding. The interest rate on the bond payable was 12%, 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 $24. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year Assets Current assets Accounts receivable, net Inventory $ 4,00 15,700 10,350 5 4,140 10.400 8,720 32,012 Total current assets. Property and equipment: Land Buildings and equipment, net Total property and equipment Total asset Liabilities and Stockholders Equity 2e, 30 7,300 28.500 27.300 $59,313 552,220 $59,818 $53,220 $10,800 860 430 12, 090 $ 8,950 1,350 430 10,738 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 8,750 20,840 8,750 19,480 87 930 4,850 5,780 33,198 38,978 $59,818 938 4,850 5,780 27,960 33, 740 $53, 220 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Sales $92,800 Cost of goods sold 58,500 gross margin 33,500 Selling and administrative expenses: Last Year $87,000 54,500 32. See Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year Sales $92, eee $87, eee Cost of goods sold 58, 580 54, 500 Gross margin 33,500 32,500 Selling and administrative expenses: Selling expenses 9,800 9, 30e Administrative expenses 13, see 12,300 Total selling and administrative expenses 23, 100 21,600 Net operating income 10,400 18,900 Interest expense 1,85e 1, 25e Net income before taxes 9,350 9,850 Income taxes 3,740 3,940 Net income 5, 610 5,918 Dividends to common stockholders 372 744 Net income added to retained earnings 5,238 5,166 Beginning retained earnings 27,960 22,794 Ending retained earnings $33,198 $ 27,960 Required: Compute the following financial data for this year Required: Compute the following financial data for this year: 1. Gross margin percentage. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered a 2. Net profit margin percentage (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entere 3. Return on total assets. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12 4. Return on equity. (Round your percentage answer to 2 decimal places (i.e., 0.1234 should be entered as 12.34 3 1 2 Gross margin percentage Net profit margin percentage Return on total assets 3 1 Return on equity Exercise 14-6 Financial Ratios for Assessing Market Performance (LO14-6) 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 920,000 shares of common stock were outstanding. The interest rate on the bond payable was 12%, 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 $24.00. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year Assets Current assets Cash Accounts receivable, net Inventory Prepaid expenses Total current assets Property and equipment: Land Buildings and equipment, nes Total property and equirent Total 35 set Liabilities and Stockholders Equity $ 2,772 15,600 10,300 1.920 30, 592 $ 2,930 10, 350 8,63 7,200 20,400 27,600 $58, 192 7,200 20,200 27.402 551,700 $10,700 840 420 11,960 $ 8,900 1,300 420 10,620 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 7,500 19, 460 7,500 18,120 92e 4,800 5,720 33,012 38,732 $58,192 920 4,8ee 5,720 27,860 33, 580 $51,700 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Sales $91, eee cost of goods sold 58,00 Gross margir Selling and administrative expenses seiling expenses Last Year $86,00 Last Year $86, eee 54,000 32, eee Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Sales $91,000 Cost of goods sold 58,000 Gross margin 33,000 Selling and administrative expenses: Selling expenses 9,700 Administrative expenses 13,200 Total selling and administrative expenses 22,900 Net operating income 10,100 Interest expense 920 Net income before taxes 9,200 Income taxes 3,680 Net income 5, 520 Dividends to common stockholders 368 Net income added to retained earnings 5,152 Beginning retained earnings 27,860 Ending retained earnings $33,012 9, 200 12,200 21,400 10,600 gee 9,700 3,888 5,820 736 5, 084 22,776 $27,860 Required: Compute the following financial data for this year Required: Compute the following financial data for this year: -47 1. Earnings per share. (Round your answer to 2 decimal places.) 2. Price-earnings ratio. (Round your intermediate calculations and final answer to 2 decimal 3. Dividend payout ratio. (Round your intermediate calculations and final answer to 2 decima 4. Dividend yield ratio. (Round your answer to 2 decimal places.) 5. Book value per share. (Round your answer to 2 decimal places.) 1. Earnings per share 2 Price-earnings ratio 3 Dividend payout ratio 4 Dividend yield ratio 5 Book value per share