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 500,000 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 $ 1,270 10, 20e 12,400 660 24,5301 $ 1,400 8,200 12,200 510 22,310 10,800 42,085 52 885 $77,415 10,800 34,421 45,221 $67,531 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 ter 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 Habilities and stockholders equity $18.900 1,030 120 20,050 $17,600 790 120 18,510 9,400 29.450 2.400 27 910 500 4.000 4,500 43,465 47,265 $27,415 See 4,000 4,500 35,121 39,621 $67,531 Last Year $65,000 40,000 25,00 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Sales $79,120 Cost of goods sold 46,740 Gross margin 32,380 Selling and administrative expenses: Selling expenses 10,700 Administrative expenses 6,500 Total selling and administrative expenses 17. 200 Net operating income 15,180 Interest expense 940 Net Income before taxes 14,240 Income taxes 5,696 Net income 8,544 Dividends to common stockholders 200 Net incone added to retained earnings 8,344 Beginning retained earnings 35,121 Ending retained earnings $43,465 10,60e 6.700 17,300 2,700 940 6,760 2.784 4,056 375 3,681 31,440 $35,121 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 sole period (Use 365 days in a year. Round your intermediate calculations and finel 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 urnover days days
