Comparative financial statements for Weller Corporation, a merchandising company

Question

Comparative financial statements for Weller Corporation, a merchandising company, for the fiscal year ending December 31 appear below. The company did not issue any new common stock during the year. A total of 600,000 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. The market value of the company’s common stock at the end of the year was $30. All of the company’s sales are on account.

Accounts receivable turnover. (Assume that all sales are on account.) (Round your answer to 2 decimal places.)

Average collection period. (Use 365 days in a year. Round your intermediate calculations and final answer to 2 decimal places.)

Inventory turnover. (Round your answer to 2 decimal places.)

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 fiscal year ending December 31 appear below. The company did not issue any new common stock during the year. A total of 600,000 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. The market value of the company’s common stock at the end of the year was $30. All of the company’s sales are on account.

Explanation / Answer

Accounts receivable turnover Credit Sales /Avg Account receivables =76095/((10100+7000)/2) 8.900 Average collection period 365 Days/Accounts receivable turnover 365/8.900 41.011 Inventory turnover Inventory Turnover =Cost of Goods Sold / Average Inventory =32620/((12400+10900)/2) 2.8 AverageSale Period 365 Days/Inventory Turnover =365/2.8 130.36 Operating Cycle Operating Cycle = 41.011+130.36 171.37 Total asset turnover. Net sales/Avg Asset 76095/((84883+69784)/2) 0.98

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