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 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 end of this year was $26. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet dollars in thousands) This Year Last Year Assets Current assets: s 1,220 7,900 11,900 $ 1,250 9,100 13,700 790 Cash Accounts receivable, net Inventory 650 Prepaid expenses 24,840 21,670 Total current assets Property and equipment: 10,300 33,294 43,594 10,300 Land Buildings and equipment, net Total property and equipment 42,088 52,388 $77,228 $65,264 Total assets

Answer 1

Answer-1)- Working capital =Current assets- Current liabilities

= $24840-$21200

= $3640

2)- Current Ratio=Current Assets/ Current Liabilities

= $24840/$21200

= 1.17 times

3)- Acid-test (Quick ratio):- Current assets-Inventory-Prepaid expenses/Current Liabilities

= ($24840-$13700-790)/$21200

= $10350/$21200

= 0.49 times