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 $26. All of the company's sales are on account This Year Last Year Assets Current assets: Cash $ 1,100 $ 1,400 Accounts receivable, net 9,900 7,900 Inventory 12,700 12,500 Prepaid expenses 760 660 Total current assets 24,460 22,460 Property and equipment: Land 9,000 9,000 Buildings and equipment, net 45,754 36,864 Total property and equipment 54,754 45,864 Total assets $79,214 $68,324 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $19,000 $17,900 Accrued liabilities 930 710 Notes payable, short term 120 120 Total current liabilities 20,050 18,730 Long-term liabilities: Bonds payable 9,600 9,600 Total liabilities 29,650 28, 330 Stockholders' equity: Common stock 600 600 Additional paid-in capital 4,000 4,000 Total paid-in capital 4,600 4,600 Retained earnings 44,964 35, 394 Total stockholders' equity 49,564 39,994 Total liabilities and stockholders' equity $79,214 $68, 324 es Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year Sales $79,210 $64,000 Cost of goods sold 44,100 37,000 Gross margin 35, 110 27,000 Selling and administrative expenses: Selling expenses 11,100 11,000 Administrative expenses 6,700 6,700 Total selling and administrative expenses 17,800 17,700 Net operating income 17,310 Interest expense 960 960 Net income before taxes 16,350 8, 340 Income taxes 6,540 3,336 Net income 9,810 5,004 Dividends to common stockholders 240 450 Net income added to retained earnings 9,570 4,554 Beginning retained earnings 35, 394 30,840 Ending retained earnings $44,964 $35, 394 9,300 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 calculakions 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 turnover days days