Comparative financial statements for Weller Corporation, a merchandising company

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 bonds, which were sold at their face value, was 10%. The income tax rate was 40% and the dividend per share of common stock was $0.40 this year. The market value of the company’s common stock at the end of the year was $27. All of the company’s sales are on account.

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 bonds, which were sold at their face value, was 10%. The income tax rate was 40% and the dividend per share of common stock was $0.40 this year. The market value of the company’s common stock at the end of the year was $27. All of the company’s sales are on account.

Required Caml ealowin tncia cea or tia yr 1. Accounts receivable turnover. (Assume that all sales are on account.) (Round your answer to 2 decimal places.) Accounts recaivable mover 2. Average collection period. (Use 365 days in a year. Round your intermediate calculations and final answer to 2 decimal places.) Average collection period days 3. Inventory turnover. (Round your answer to 2 decimal places.) nventory turnover 4. Average sale period. (Use 365 days in a year. Round your intermediate calculations and final answer to 2 decimal places.) Average sale period your intermediate calculations and final Operating cycle days 6. Total asset turnover. (Round your answer to 2 decimal places.) Total asset turnover

Explanation / Answer

1)Accounts receivable turnover = Net credit sales /Average accounts receivable

     = 80410 /9350

      = 8.6

**Average receivable = [beginning+ ending ]/2

2)Average collection period = 365 /Accounts receivable turnover

               = 365 /8.6

              = 42.44 days

3)Inventory turniver = cost of goods sold / Average inventory

               = 41310 /12150

              = 3.4

**Average inventory = [12300+12000]/2=12150

          =[8200+10500]/2 = 9350

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