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 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 $075 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. eller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last year $ 1,190 9,200 13,000 $ 1,25 7.300 10,700 530 19 NO 10,30 10,00 32.522 $76,799 565,197 Assets Current assetsi Cash Accounts receivable, net Inventory Prepaid expenses Total current assets Property and equipment Land Bulldings and equipment, het 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 $19.600 930 516,400 880 110 19,90 20,540 700 700 4.ee 5,200 42-259 45,859 $76,799 4.700 34,217 39,417 $68,107 Last Year $65,000 39,000 26,000 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Sales $77,550 Cost of goods sold 46.550 Gross margin 31,000 Selling and administrative expenses Selling expenses 10,800 Administrative expenses 16,400 Total selling and administrative expenses 17,200 Net operating income 13,800 Interest expense 1930 Net Income before taxes 12) 870 Income taxes Net income 7222 Dividends to common stockholders 280 Net Income added to retained earnings 7442 Beginning retained earnings 34,212 Ending retained earnings $42,159 5,148 10,400 7,600 17,400 8,600 930 7.670 3,068 4,602 525 4,077 30.640 $34,717 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 turnover 2 Average collection period 3. Inventory turnover 4 Average sale period 5. Operating cycle 6 Total asset turnover days days
