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 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 end of this year was $18. 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 Accounts receivable, net Inventory Prepaid expenses Total current et Property and equipment: $ 1,20 12.300 9,700 1,800 25,080 $ 1.560 9, 100 8.200 2,100 20,960 6,000 19,200 25,200 $50,280 6,000 19.000 25,000 $45,960 $ 8,300 $ 9.500 600 Buildings and equipment, net Total property and equipment Total assets Liabilities and stockholders' Equity Current liabilities Accounts payable Accrued liabilities Notes payable, short term Total current liabilities Long-term liabilities Bonds payable Total liabilities Stockholders' equity: Common stock Additional paid-in capital 300 10,400 9,300 5,000 15,400 5.000 14,00 4,200 4,200

Answer 1

Working capital = Current assets - Current Liabilities

= 25,080-10,400

= 14,680

.

Current Ratio = Current assets/Current liabilities

= 25,080/10,400

= 2.41

.

Acid test ratio = Quick assets/Current liabilities

= (25,080-9700-1800)/10400

= 1.31