Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
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 700,000 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 yeat and $0.40 this yeat. The market value of the company's common stock ot the end of this year was $22. All of the company's sales are on account. are on account. \begin{tabular}{|c|c|c|} \hline \begin{tabular}{l} Weller Corporation \\ Comparative Balance Sheet \\ (dollars in thousands) \end{tabular} & This Year & Last Year \\ \hline \multirow{2}{*}{\multicolumn{3}{|c|}{\begin{tabular}{l} Assets \\ Current assets: \end{tabular}}} \\ \hline & & \\ \hline Cash & $1,210 & $1,230 \\ \hline Accounts receivable, net & 10,000 & 6,500 \\ \hline Inventory & 14,000 & 11,600 \\ \hline Prepaid expenses & 700 & 560 \\ \hline Total current assets & 25,910 & 19,890 \\ \hline \multicolumn{3}{|l|}{ Property and equipment: } \\ \hline Land & 9,200 & 9,200 \\ \hline Buildings and equipment, net & 42,989 & 39,972 \\ \hline Total property and equipment & 52,189 & 49,172 \\ \hline Total assets & $78,099 & $69,062 \\ \hline \multicolumn{3}{|l|}{\begin{tabular}{l} Liabilities and Stockholders' Equity \\ Current Liabilities: \end{tabular}} \\ \hline Accounts payable & $20,400 & $18,600 \\ \hline Accrued liabilities & 1,050 & 740 \\ \hline Notes payable, short term & 296 & 290 \\ \hline \begin{tabular}{l} Total current liabilities \\ Long-term liabilities: \end{tabular} & 21,740 & 19,630 \\ \hline \begin{tabular}{l} Long-term liabilities: \\ Bonds payable \end{tabular} & & \\ \hline \begin{tabular}{l} Bonds payable \\ Total liabilities \end{tabular} & 9,800 & 9,800 \\ \hline Total liabilities & 31,540 & 29,430 \\ \hline \multicolumn{3}{|l|}{ Stockhotders ' equity: } \\ \hline \begin{tabular}{l} Connon stock \\ Additional paid-in capital \end{tabular} & 700 & 700 \\ \hline \begin{tabular}{l} Additional paid-in capital \\ Total paid-in capital \end{tabular} & 4,000 & 4,000 \\ \hline & 4,700 & 4,700 \\ \hline \begin{tabular}{l} Retained earnings \\ Total stockholders' equity \end{tabular} & 41,859 & 34,932 \\ \hline Total liabilities and stockholders' equity & 46,559 & 39,632 \\ \hline Total Clabitities and stockholders' equity & $78,099 & $69,062 \\ \hline \end{tabular} Weller Corporation Comparative Income Statement and Domanndi:-tit.- 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.) \begin{tabular}{|l|l|} \hline 1. Working capital \\ \hline 2. Current ratio \\ \hline 3. Acid-test ratio \\ \hline \end{tabular}

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Forensic And Investigative Accounting

Authors: Larry Crumbley, Lester E. Heitger, G. Stevenson Smith

4th Edition

0808021435, 9780808021438

More Books

Students also viewed these Accounting questions

Question

Describe the characteristics of a 360-degree performance appraisal.

Answered: 1 week ago