Exercise 14-3 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 the year was $29. All of the company's sales are on account. Heller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year $ 1,230 9.300 12,300 780 23,610 $1,220 7.300 11,600 600 20,720 Assets Current assets Cash Accounts receivable, het Inventory Prepaid expenses Total current assets Property and equipment Tand 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 9,800 43,520 53,320 $76,930 9,800 37.172 46,972 $67,692 $18,000 $18,900 910 150 19,960 150 18,900 8.800 8.800 UNAYLOR AUMAA 8,800 28,760 8,800 27,700 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 600 4,000 4,600 43,570 48,170 $76,930 600 4,000 4,600 35, 392 39,992 $67,692 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year Sales $ 75,530 $66,000 Cost of goods sold 43,020 40,000 Gross margin 32,510 26,000 Selling and administrative expenses : Selling expenses 11,100 10,600 Administrative expenses 6, 100 Total selling and administrative expenses 17,600 16,700 Net operating income 14.910 9, 300 Interest expense 880 880 Net income before taxes 14,030 8,420 Income taxes 5.612 3,368 Net income 8,418 5,052 Dividends to common stockholders 240 300 Net income added to retained earnings 8,178 4,752 Beginning retained earnings 35, 392 30, 640 Ending retained earnings $43,570 $35, 392 Net income before taxes Income taxes Net income Dividends to common stockholders Net income added to retained earnings Beginning retained earnings Ending retained earnings 14,030 5,612 8,418 240 8,178 35,392 $43,570 8,420 3.368 5,052 300 4,752 30.640 $35,392 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 tumover 2. Average collection period 3. Inventory turnover 4. Average sale period 5. Operating cycle 6. Total asset turnover days days