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 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 $20. 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 Accounts receivable, net Inventory Prepaid expenses Total current assets Property and equipment: $ 1,140 9,400 13,800 620 24,960 $ 1,290 7,400 12,000 670 21,360 Land Buildings and equipment, net Total property and equipment Total assets Liabilities and Stockholders' Equity Current liabilities: 10,300 47,698 57,998 $82,958 10,300 42,692 52,992 $74,352 $20,300 930 280 21,510 880 280 20,560 9,800 31,310 9,800 30, 360 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 600 4,000 4,600 47,048 51,648 $82,958 600 4,000 4,600 39,392 43,992 $ 74,352 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year Sales $ 75,600 $65,000 Cost of goods sold 43,860 32,000 1 710 on Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year Sales $ 75,600 $65,000 Cost of goods sold 43,860 32,000 Gross margin 31,740 33,000 Selling and administrative expenses: Selling expenses 11,200 10,600 Administrative expenses 6,400 6,000 Total selling and administrative expenses 17,600 16,600 Net operating income 14,140 16,400 Interest expense 980 980 - Net income before taxes 13,00 15, 420 420 Income taxes 5,264 6,168 Net income 7,896 9,252 Dividends to common stockholders 240 600 Net income added to retained earnings 7,656 8,652 Beginning retained earnings 39,392 30, 740 Ending retained earnings $ 47,048 $39, 392 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 decimal places.) 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 places.) 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 6. Total asset turnover days days