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 $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 ook Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year Hint $ 1,120 9,800 12,300 730 23,950 $ 1,240 7,700 12,000 550 21,490 Print 9,500 rences 56, 140 $80,090 9,500 36, 779 46,279 $67.769 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 asset 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 $20,300 910 170 21,380 $17,800 700 170 18,670 8,600 29,980 8,600 27,270 700 4,000 4,700 700 4.000 4,700 45, 410 50, 110 $80,090 567.769 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year sales S80, 500 566,000 Cost of goods sold 40,000 Gross margin 35,545 26,000 Selling and administrative expenses: Selling expenses 11,400 10,600 Administrative expenses 6,800 6,400 Total selling and administrative expenses 18.200 17,000 Net operating income 17,345 9.000 Interest expense 860 860 ME CA Hell Total stockholders' equity Total liabilities and stockholders' equity 50, 110 $80,090 40,499 $67, 769 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year Sales $80.500 $66,000 Cost of goods sold 44,955 40,000 Gross margin 35,545 26,000 Selling and administrative expenses: Selling expenses 11,400 10,600 Administrative expenses 6,800 6,400 Total selling and administrative expenses 18,200 17,000 Net operating income 17,345 9,000 Interest expense 860 Net income before taxes 16,485 8,140 Income taxes 3,256 Met income 9,891 4,884 Dividends to common stockholders 280 525 Net Income added to retained earnings 9,611 4,359 Beginning retained earnings 35, 799 31,440 Ending retained earnings $ 45, 410 $35, 799 ences 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 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 850,000 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 $20. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year $ 1,810 12,800 9,950 1.850 26,410 $ 710 10,000 8,400 2,200 21,310 6,500 19,700 26,200 $52,610 6,500 19.500 26,000 $47,310 Assets Current assetsi Cash Accounts receivable, net Inventory Prepaid expenses Total current assets Property and equipment Land Buildings and equipment, net Total property and equipment Total asset Liabilities and Stockholders' Equity Current liabilities: Accounts payable Accrued liabilities Notes payable, short tern Total current liabilities Long-tern 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 $10,000 700 350 $ 8,550 950 350 9,850 5.000 16.050 5,000 14,050 050 4.450 5,300 31.260 850 4.450 5,300 22.160 32.460 $47,310 $52,610 Weller Corporation Comparative Income statement and Reconciliation dollars in thousands) This Year Last Year Sales 584,000 $79.000 Cost of goods sold 54,500 50, 500 Gross margin 29.500 28.500 Selling and administrative expenses Selling expenses 9,000 8.500 ministrative expenses 12.500 11.500 Total selling and administrative expenses 20.000 21.500 Stockholders' equity: Common stock Additional paid-in capital Total paid-in capital Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 850 4,450 5,300 31,260 36,560 $52,610 850 4,450 5,300 27,160 32,460 $47,310 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year Sales $84,000 $ 79,000 Cost of goods sold 54,500 50,500 Gross margin 29,500 28,500 Selling and administrative expenses: Selling expenses 9,000 8,500 Administrative expenses 12,500 11,500 Total selling and administrative expenses 21,500 20,000 Net operating income 8,000 8,500 Interest expense 600 600 Net income before taxes 7,400 7,900 Income taxes 2.960 3, 160 Net income 4,440 4,740 Dividends to common stockholders 340 680 Net income added to retained earnings 4,100 4,060 Beginning retained earnings 22. 160 23,100 Ending retained earnings $31,260 $27,160 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 as 12.3).) 2. Net profit margin percentage. (Round your percentage answer to 1 decimal place (ie, 0.1234 should be entered as 12.3).) 3. Return on total assets. (Round your percentage answer to 1 decimal place (ie., 0.1234 should be entered as 12.3)) 4. Return on equity. (Round your percentage answer to 2 decimal places (.e., 0.1234 should be entered as 12.34).) 1. Gross margin percentage 2. Not profit margin percentage 3. Retum on total assets 4. 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 940,000 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 $25.00. All of the company's sales are on account. ak Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year $ 5,304 15,800 10,400 1.940 $ 5,350 10,450 8, 760 2,380 26.940 7,400 20.600 28.000 $61,444 7.400 20.400 27.800 554.740 Assets Current assets Cash Accounts receivable, net Inventory Prepaid expenses Total current assets Property and equipment Land Daildings 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 Additional paid-in capital Total paid in capital Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $10,900 $ 9,000 1,400 440 10,840 12,220 10.000 22,220 10.000 20.840 9:40 4.900 5.840 4.900 5.840 28.060 554,740 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year Sales $93,000 $88,000 Cost of goods sold 59,000 Cross margin 34.000 33.000 Selling and administrative expenses: Selling expenses 9.900 9.400 Administrative expenses 13,400 12,400 Total selling and administrative expenses 23,300 21,800