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 $29. 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 | $ | 1,340 | ||
Accounts receivable, net | 10,000 | 7,200 | ||||
Inventory | 12,700 | 12,200 | ||||
Prepaid expenses | 800 | 530 | ||||
Total current assets | 24,660 | 21,270 | ||||
Property and equipment: | ||||||
Land | 10,300 | 10,300 | ||||
Buildings and equipment, net | 49,604 | 41,156 | ||||
Total property and equipment | 59,904 | 51,456 | ||||
Total assets | $ | 84,564 | $ | 72,726 | ||
Liabilities and Stockholders' Equity | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 19,600 | $ | 19,000 | ||
Accrued liabilities | 910 | 760 | ||||
Notes payable, short term | 280 | 280 | ||||
Total current liabilities | 20,790 | 20,040 | ||||
Long-term liabilities: | ||||||
Bonds payable | 8,400 | 8,400 | ||||
Total liabilities | 29,190 | 28,440 | ||||
Stockholders' equity: | ||||||
Common stock | 600 | 600 | ||||
Additional paid-in capital | 4,000 | 4,000 | ||||
Total paid-in capital | 4,600 | 4,600 | ||||
Retained earnings | 50,774 | 39,686 | ||||
Total stockholders' equity | 55,374 | 44,286 | ||||
Total liabilities and stockholders' equity | $ | 84,564 | $ | 72,726 | ||
Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) | ||||||
This Year | Last Year | |||||
Sales | $ | 78,260 | $ | 65,000 | ||
Cost of goods sold | 39,840 | 32,000 | ||||
Gross margin | 38,420 | 33,000 | ||||
Selling and administrative expenses: | ||||||
Selling expenses | 11,400 | 10,900 | ||||
Administrative expenses | 7,300 | 6,100 | ||||
Total selling and administrative expenses | 18,700 | 17,000 | ||||
Net operating income | 19,720 | 16,000 | ||||
Interest expense | 840 | 840 | ||||
Net income before taxes | 18,880 | 15,160 | ||||
Income taxes | 7,552 | 6,064 | ||||
Net income | 11,328 | 9,096 | ||||
Dividends to common stockholders | 240 | 450 | ||||
Net income added to retained earnings | 11,088 | 8,646 | ||||
Beginning retained earnings | 39,686 | 31,040 | ||||
Ending retained earnings | $ | 50,774 | $ | 39,686 | ||
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.)
1) | Average Account Receivables = (beginning Account Receivables + ending Account Receivables)/2 | |||||
= ( $7200+10000)/2 | ||||||
= $ 8600 | ||||||
Account Receivables Turnover Ratio = Sales / average Account Receivables | ||||||
= $78260/8600 | ||||||
=9.1 times | ||||||
2) | Average Collection Period = 365/ Account Receivables turnover ratio | |||||
= 365 days /9.1 | ||||||
=40.11 days | ||||||
3) | ||||||
Average Inventory = (beginning inventory + ending inventory)/2 | ||||||
= ( $12200+12700)/2 | ||||||
= $ 12450 | ||||||
Inventory Turnover Ratio = Cost of goods sold / average inventory | ||||||
= $39840/12450 | ||||||
=3.2 times | ||||||
4) | Average Sales Period = 365/ inventory turnover ratio | |||||
= 365 days /3.2 | ||||||
=114.06 days | ||||||
5) | Operating Cycle = Average Sales Period+ Average Collection Period | |||||
=40.11+114.06 | ||||||
154.17 | days | |||||
6) | Average Assets = (beginning Assets + ending Assets)/2 | |||||
= ( $72726+84564)/2 | ||||||
= $ 78645 | ||||||
Assets Turnover Ratio = Sales / average Assets | ||||||
= $78260/78645 | ||||||
=1 times | ||||||
Kindly give a positive rating if you are satisfied with this solution and please ask if you have any queries. | ||||||
Comparative financial statements for Weller Corporation, amerchandising company, for the year ending December 31 appear...
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...
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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 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...
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 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...
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 800,000 shares of common stock were outstanding. The interest rate on the bond payable was 12%, 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...
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...
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 800,000 shares of common stock were outstanding. The interest rate on the bond payable was 12%, 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...
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 800,000 shares of common stock were outstanding. The interest rate on the bond payable was 12%, 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...
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...
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