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 $27. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year $ 1,090 9,600 13,700 720 25, 110 $ 1,250 8,100 11,500 670 21,520 10,000 44,058 54,058 $79,168 10,000 38,844 48,844 $ 70,364 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 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 $19,000 910 200 20,110 $19,200 870 200 20, 270 8,100 28,210 8,100 28, 370 600 4,000 4,600 46, 358 50,958 $79,168 600 4,000 4,600 37,394 41,994 $70,364 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year Sales $71,000 $65,000 Cost of goods sold 37,000 35,000 Groes marain 34.000 30.000 Last Year $65,000 35,000 30,000 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Sales $71,000 Cost of goods sold 37,000 Gross margin 34,000 Selling and administrative expenses: Selling expenses 10,800 Administrative expenses 6,700 Total selling and administrative expenses 17,500 Net operating income 16,500 Interest expense 810 Net income before taxes 15,690 Income taxes 6,276 Net income 9,414 Dividends to common stockholders 450 Net income added to retained earnings 8,964 Beginning retained earnings 37,394 Ending retained earnings $46, 358 11,000 6,700 17,700 12,300 810 11,490 4,596 6,894 240 6,654 30,740 $37,394 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
