Sook 790 Exercise 14-2 Financial Ratios for Assessing Liquidity (L014-2] 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 the year was $24. All of the company's sales are an account Welter Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year Assets Current assets: Cash $ 1,190 1.240 Accounts receivable, net 10,600 8,200 Inventory 12,660 11,100 Prepaid expenses 690 Total current assets 25, 180 Property and equipment Land 10,900 10,900 Buildings and equipment, net 38,292 38,836 Total property and equipment 49102 49,736 Total assets 574,282 $70,966 Liabilities and Stockholders' Equity Current Stabilities: Accounts payable $19,500 $19,10 Accrued liabilities 1,090 850 Notes payable, short tern 220 Total current liabilities 20,810 20,170 Long-term Liabilities: Bonds payable 9,400 9,400 Total liabilities 30,210 29,570 Stockholders' equity Cormon stock 60 60 Additional paid-in capital 4. Me 4,000 Total paid-in capital 4,600 4,600 Retained earnings 29.422 35,796 Total Arche! 41196 es 1,90 220 20,810 850 220 20,170 9,480 9,400 29,570 30,210 Accrued 1aDiuities 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 39,472 44,072 574,282 600 4,000 4,600 36,796 41,396 $70,966 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year Sales $67,000 $65,000 Cost of goods sold 43,000 36,000 Gross margin 24,000 29,000 Selling and administrative expenses: Selling expenses 10,700 10,900 Administrative expenses 7,400 6,400 Total selling and administrative expenses 18,100 17,300 Net operating incone 5,900 11,700 Interest expense 940 940 Net Income before taxes 4,960 10,760 Income taxes 1,984 4,384 Net Income 2,976 6,456 Dividends to common stockholders 300 300 Net income added to retained earnings 2,676 6,156 Beginning retained earnings 36,796 30,640 Ending retained earnings $39,472 $36,796 Required: Compute the following financial data and ratios for this year. 1. Working capital. (Enter vour answer in thousands. This Year Last Year $67,000 $65,800 43,000 36,000 24,000 29,000 Sales Cost of goods sold Gross margin Selling and administrative expenses: Selling expenses Administrative expenses Total selling and administrative expenses Net operating income Interest expense Net income before taxes Income taxes Net Income Dividends to common stockholders Net income added to retained earnings Beginning retained earnings Ending retained earnings 10,700 7,400 18,100 5,900 940 4,960 1,984 2,976 300 2,676 36,796 $39,472 10,900 6,400 17,300 11,700 940 10,760 4,304 6,456 300 6,156 30, 640 $36,796 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 4 166 Administrative expenses Total selling and administrative expenses Net operating income Interest expense Net Income before taxes Income taxes Net income Dividends to common stockholders Net income added to retained carnings Beginning retained earnings Ending retained earnings 6,50 17,800 13,350 830 12,520 5,000 7,512 200 7,312 38,632 545,944 16,100 16,600 13,400 830 12,570 5,028 7.542 250 7,292 31,340 $38,632 Hoe P 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 cyclo (Round your intermediate calculations and final answer to 2 decimal places.) 6. Total asset turnover (Round your answer to 2 decimal places.) References days 1 Accounts recotturnover 2 Average collection period 3. Inventory turnover 4 Average period 6. Operating 6. Totalsset bove days days