Exercise 16-3 (Algo) Financial Ratios for Asset Management (L016-3) 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 500,000 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 $ 1,120 10,500 13,500 730 125,850 $1,210 8,200 11,800 640 21,850 10,200 47,711 57,011 $83,761 10,200 38,214 48,414 $70,264 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 tere 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 $17,400 730 $19,300 980 290 20,570 290 18,420 8,600 20170 3.600 27,020 500 4,000 4,500 50,091 56,591 500 4,000 4,500 38,740 Total stockholders' equity Total liabilities and stockholders' equity 54,591 $83,761 43,244 $70,264 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year Sales $82,280 $66,000 Cost of goods sold 44,275 34,000 Gross margin 38,005 32,000 Selling and administrative expenses: Selling expenses 11,000 10,400 Administrative expenses 6,900 6,400 Total selling and administrative expenses 17,900 16,800 Net operating income 20, 105 15,200 Interest expense 860 860 Net income before taxes 19,245 14,340 Income taxes 7,698 5,736 Net Income 11,547 8,604 Dividends to common stockholders 200 500 Net income added to retained earnings 11,347 8,104 Beginning retained earnings 38,744 30, 640 Ending retained earnings $50,091 $38, 744 Required: Compute the following financial data for this year 1. Accounts receivable turnover. (Assume that all sales are on account.) (Round your answer to 2 decimal places.) 2. Average collection period. (Use 365 days in a year. Round your intermediate calculations and final answer to 2 de 3. Inventory turnover (Round your answer to 2 decimal places.) 4. Average sale period. (Use 365 days in a year. Round your intermediate calculations and final answer to 2 decimal 5. Operating cycle. (Round your intermediate calculations and final answer to 2 decimal places.) 6. Total asset turnover. (Round your answer to 2 decimal places.) days 1. Accounts receivable turnover 2. Average collection period 3. Inventory turnover 4. Average sale period 5. Operating cycle days days 6. Total asset turnover
