Exercise 15-3 Financial Ratios for Asset Management (LO15-3] 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 bonds, which were sold at their face value, was 10%. The income tax rate was 40% and the dividend per share of common stock was $0.40 this year. The market value of the company's common stock at the end of the year was $22. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year $ Assets Current assets: Cash Accounts receivable, net Inventory Prepaid expenses Total current assets Property and equipment: 1.100 9.000 12.689 788 23.40 $ 1,340 6.700 11, 180 538 19.720 Buildings and equipment.net Total property and equipment Total assets Liabilities and Stockholders' Equity 9.00 49.654 59,056 582.524 9.400 42,515 51.915 $21.635 Saved Pre-Built Problems A Help $82,534 $71,635 $19,200 960 210 $17,900 780 210 18,899 20, 370 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 8,500 28.870 8,500 27,399 ook 700 4,000 4,700 48,964 53,664 $82,534 700 4,000 4,700 39.545 rences $71,635 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year Sales $69,865 $65,000 Cost of goods sold 35,550 33,000 Gross margin 34, 315 32,000 Selling and administrative expenses: Selling expenses 10,800 10,400 Administrative expenses 6,500 6, 2ee Total selling and administrative expenses 17,300 16,600 Net operating income 17,015 Interest expense 850 85e Net income before taxes 16,165 14,55e Income taxes 6,466 5,820 Net income 9,699 8,73e Dividends to common stockholders 280 525 Net income added to retained earnings 9,419 8,285 Beginning retained earnings 39,545 31, 340 Ending retained earnings $48,964 $39,545 nces Required: Compute the following financial data for this year 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.) rences days 1. Accounts receivable tumover 2 Average collection period 3. Inventory turnover 4 Average sale period 5. Operating cycle 5. Total asset tumover days days
