Question

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 500.000 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 $22. All of the company's sales are on account Weller Corporation Comparative Balance Sheet (dollars in thousands) Assets Current assets $ 1,2 10,300 Accounts receivable, net Inventory Prepaid expenses Total current assets Property and equipment Buildings and equipment. net Total property and equipment 9 . 6 59. 534,066 3 . 0 40 565.650 Current assets Accounts receivable, net sold Prepaid expenses Total current sets Property and w ent Cast of Gross margin Selling and d istrative expenses tut Total property and w , et ent strative penses Total selling and t erati et Income before tas Dividends to contacters et inced to retaining Beginning retained caring Ending retained in Required: Compute the following financial data and ratios for this year 1 Working capital Enter answer in thousands) 2. Current ratio (Round your answer to 2 decimal places.) 3. Acid-test ratio (Round your answer to 2 decimal places)

I know the pictures a little hard to see. If you zoom in though, that should help. I double checked on my own computer before I posted this.

Answer 1

1. Working Capital $4,120 2. Current Ratio 1.20 to 1 3. Acid test Ratio 0.57 to 1 Calculation: & Working capital = Current Assets - Current Liabilities working capital for = $ 24,730 - $20,610 this year 3 $4,120 12) Current Ratio = This year Current Assets & Current liabilities = $ 24,730 $ $ 29, 610 = 1:20 (3 Acid Quick Test Ratio = Quick Assets & Current liabilities Assets & Current Assets - Inventory - Prepaid expenses = $24,730 - $12,300 - $630 = $1,800 Now, Acid Test Ratio this year = $ 11,000 - $20,610 0.57