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 $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 $ 1,160 $ 1,290
Accounts receivable, net 10,700 7,300
Inventory 13,200 12,000
Prepaid expenses 790 640
Total current assets 25,850 21,230
Property and equipment:
Land 10,500 10,500
Buildings and equipment, net 50,132 40,532
Total property and equipment 60,632 51,032
Total assets $ 86,482 $ 72,262
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 20,400 $ 19,200
Accrued liabilities 990 720
Notes payable, short term 130 130
Total current liabilities 21,520 20,050
Long-term liabilities:
Bonds payable 9,300 9,300
Total liabilities 30,820 29,350
Stockholders' equity:
Common stock 600 600
Additional paid-in capital 4,000 4,000
Total paid-in capital 4,600 4,600
Retained earnings 51,062 38,312
Total stockholders' equity 55,662 42,912
Total liabilities and stockholders' equity $ 86,482 $ 72,262
Weller Corporation
Comparative Income Statement and Reconciliation
(dollars in thousands)
This Year Last Year
Sales $ 81,000 $ 66,000
Cost of goods sold 40,320 35,000
Gross margin 40,680 31,000
Selling and administrative expenses:
Selling expenses 11,200 10,200
Administrative expenses 6,900 6,500
Total selling and administrative expenses 18,100 16,700
Net operating income 22,580 14,300
Interest expense 930 930
Net income before taxes 21,650 13,370
Income taxes 8,660 5,348
Net income 12,990 8,022
Dividends to common stockholders 240 450
Net income added to retained earnings 12,750 7,572
Beginning retained earnings 38,312 30,740
Ending retained earnings $ 51,062 $ 38,312
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.)
