Exercise 15-3 Financial Ratios for Asset Management

Special instructions: Place your responses in this document. All you should need is a calculator, but if you prefer to work in Excel, that is fine. There are 6 computations you need to make so place your responses on this document.

Weller Corporation
Comparative Income Statement and Reconciliation
(dollars in thousands)
	This Year	Last Year
Sales	$79,000	$74,000
Cost of goods sold	52,000	48,000
Gross margin	27,000	26,000
Selling and administrative expenses:
Selling expenses	8,500	8,000
Administrative expenses	12,000	11,000
Total selling and administrative expenses	20,500	19,000
Net operating income	6,500	7,000
Interest expense	600	600
Net income before taxes	5,900	6,400
Income taxes	2,360	2,560
Net income	3,540	3,840
Dividends to common stockholders	320	600
Net income added to retained earnings	3,220	3,240
Beginning retained earnings	26,660	23,420
Ending retained earnings	$29,880	$26,660

Required:

Compute the following financial data for this year:

Accounts receivable turnover. (Assume that all sales are on account)

Average collection period.

Inventory turnover.

Average sale period.

Operating cycle.

Total asset turnover.