Reference no: EM132514843
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 bonds, which were sold at their face value, was 10%. The income tax rate was 40% and the dividend per share of common stock was $0.40 this year. The market value of the company's common stock at the end of the year was $23. 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 $1,170 $1,250
Accounts receivable, net 10,700 8,400
Inventory 13,100 11,200
Prepaid expenses 690 610
Total current assets 25,660 21,460
Property and equipment:
Land 9,900 9,900
Buildings and equipment, net 46,932 38,395
Total property and equipment 56,832 48,295
Total assets $82,492 $69,755
Liabilities and Stockholders' Equity Current liabilities:
Accounts payable $19,200 $19,000
Accrued liabilities 1,080 800
Notes payable, short term 110 110
Total current liabilities 20,390 19,910
Long-term liabilities: Bonds payable 8,500 8,500
Total liabilities 28,890 28,410
Stockholders' equity: Common stock 700 700
Additional paid-in capital 4,000 4,000
Total paid-in capital 4,700 4,700
Retained earnings 48,902 36,645
Total stockholders' equity 53,602 41,345
Total liabilities and stockholders' equity $82,492 $69,755
Weller Corporation
Comparative Income Statement and Reconciliation
(dollars in thousands)
This Year Last Year
Sales $83,085 $65,000
Cost of goods sold 43,740 38,000
Gross margin 39,345 27,000
Selling and administrative expenses:
Selling expenses 11,100 10,400
Administrative expenses 6,500 6,200
Total selling and administrative expenses 17,600 16,600
Net operating income 21,745 10,400
Interest expense 850 850
Net income before taxes 20,895 9,550
Income taxes 8,358 3,820
Net income 12,537 5,730
Dividends to common stockholders 280 525
Net income added to retained earnings 12,257 5,205
Beginning retained earnings 36,645 31,440
Ending retained earnings $48,902 $36,645
Required:
Question 1: 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.)