Exercise 16-2 (Algo) Financial Ratios for Assessing Liquidity (L016-2] 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 600,000 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 this year was $28. 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 $ 1,080 $ 1,410 Accounts receivable, net 10,000 7,500 Inventory 13,600 10,600 Prepaid expenses 610 580 Total current assets 25,290 20, 090 Property and equipnent: Land 9,100 9, 100 Buildings and equipment, net 41,098 38,124 Total property and equipment 50,198 47,224 Total assets $75,488 $67,314 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $20, 100 $18,400 Accrued liabilities 1,040 800 Notes payable, short term 210 210 Total current liabilities 21,350 19, 410 Long-term liabilities: Bonds payable 8,600 8,680 Total liabilities 29,950 28,012 Stockholders' equity: Common stock 680 600 Additional paid-in capital 4,000 4.ee Total paid-in capital 4,600 4,6ee Retained earnings 40,938 34,704 Total stockholders' equity 45,538 39,384 $75,488 567,314 Total liabilities and stockholders' equity Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year Sales $71,800 $65,000 Cost of goods sold 41.000 41.ee Gross margin 30, BD 24,000 Selling and administrative expenses: Selling expenses 11,400 10,700 Administrative expenses 6,6ee 6.100 Total selling and administrative expenses 18,000 16,800 Net operating income 12000 7,200 Interest expense 860 850 Net Income before taxes 11, 140 6,340 Income taxes 4.456 2,536 Net income 6,684 3,804 Prev 1 of 9 HII Next > $20,100 1,040 210 21,350 $18,400 800 210 19,410 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 8,600 29,950 8,600 28,010 600 4,080 4,500 40,938 45,538 $75,488 600 4,000 4,600 34,704 39,384 $67,314 Welter Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year Sales $71,000 $65,000 Cost of goods sold 41,000 41,800 Gross margin 30,000 24,000 Selling and administrative expenses: Selling expenses 11,400 10,700 Administrative expenses 6,600 6,100 Total selling and administrative expenses 18,000 16,800 Net operating income 12,000 7,200 Interest expense 860 860 Net income before taxes 11, 140 6,340 Income taxes 4,456 2,536 Net income 6,684 3,894 Dividends to common stockholders 450 240 Net income added to retained earnings 6,234 3,564 Beginning retained earnings 34,704 31,140 Ending retained earnings $40,938 $34,704 Required: Compute the following financial data and ratios for this year: 1. Working capital. (Enter your answer in thousands.) 2. Current ratio. (Round your answer to 2 decimal places.) 3. Acid-test ratio (Round your answer to 2 decimal places.) 1. Working capital 2 Current ratio 3. Acid-test ratio