Exercise 16-2 (Algo) Financial Ratios for Assessing Liquidity [LO16-2]

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 $25. 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	$ 1,180	$ 1,340
Accounts receivable, net	10,600	8,400
Inventory	12,200	10,800
Prepaid expenses	650	550
Total current assets	24,630	21,090
Property and equipment:
Land	10,300	10,300
Buildings and equipment, net	44,874	39,332
Total property and equipment	55,174	49,632
Total assets	$ 79,804	$ 70,722
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$ 18,600	$ 19,000
Accrued liabilities	1,050	820
Notes payable, short term	180	180
Total current liabilities	19,830	20,000
Long-term liabilities:
Bonds payable	8,300	8,300
Total liabilities	28,130	28,300
Stockholders' equity:
Common stock	600	600
Additional paid-in capital	4,000	4,000
Total paid-in capital	4,600	4,600
Retained earnings	47,074	37,822
Total stockholders' equity	51,674	42,422
Total liabilities and stockholders' equity	$ 79,804	$ 70,722

Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands)
	This Year	Last Year
Sales	$ 75,000	$ 64,000
Cost of goods sold	40,000	34,000
Gross margin	35,000	30,000
Selling and administrative expenses:
Selling expenses	11,300	10,100
Administrative expenses	6,700	6,700
Total selling and administrative expenses	18,000	16,800
Net operating income	17,000	13,200
Interest expense	830	830
Net income before taxes	16,170	12,370
Income taxes	6,468	4,948
Net income	9,702	7,422
Dividends to common stockholders	450	240
Net income added to retained earnings	9,252	7,182
Beginning retained earnings	37,822	30,640
Ending retained earnings	$ 47,074	$ 37,822

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.)