Comparative financial statements for Weller Corporation, a merchandising company
ID: 2401085 • Letter: C
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.
Average sale period. (Use 365 days in a year. Round your intermediate calculations and final answer to 2 decimal places.)
Operating cycle. (Round your intermediate calculations and final answer to 2 decimal places.)
Total asset turnover. (Round your answer to 2 decimal places.)
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.
Explanation / Answer
Solution: 4.
Average sale period = 365 / Inventory turnover
= 365 / 3.4
= 107.35 Days
working : Inventory turnover = Cost of goods sold / Average Inventory
= 41,310 / 12,150
= 3.40
Solution 5
Operating cycle =Inventory period + Accounts Receivable turnover
= 107.35 + 42.44
= 149.79 Days
working:
Inventory period = 365 / Inventory turnover
= 365 / 3.4
= 107.35
Accounts Receivable turnover = Credit Sales / Average accounts receivable
= 80,410 / 9,350
= 8.60
Accounts receivable period = 365 / Accounts Receivable turnover
= 365 / 8.60
= 42.44
Solution 6
Total assets turnover = Sales / Average total assets
= 80,410 / 77,381
= 1.04
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