Question

Comparative financial statements for Weller Corporation, a merchandising company, for the year ending December 31 appear belo
Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year $ 1,280 12,300 9,700 1,800 25,080 $ 1
Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year Sales $79,000 $
Required: Compute the following financial data for this year 1. Accounts receivable turnover. (Assume that all sales are on a
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Answer #1

Answer- 1)- Accounts receivable turnover = Sales on account /Average accounts receivable

=$79000/ ($9100+$12300)/2

=$79000/$10700

= 7.38 times

2)- Average collection period =52.14 days.

Explanation- Average collection period = 365 days/Accounts receivable turnover

= 365 days/7 times

= 52.14 days

3)-Inventory turnover = Cost of goods sold/Average inventory*

= $52000/( $8200+$9700)/2

= $52000/$8950

= 5.81times

4)- Average sale period =60.83 days.

Explanation- Average sale period = 365 days/Inventory turnover

= 365 days/ 6 times

= 60.83 days

5)- Operating cycle =113.00 days.

Explanation- Operating cycle = Average sale period + Average collection period

= 52 days+ 61 days

=113.00 days

6)- Total assets turnover ratio = Turnover/Average assets

= $79000/($45960+$50280)/2

= $79000/$48120

= 1.64 times

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