Comparative financial statements for Weller Corporation, a merchandising company
ID: 2499185 • Letter: C
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 $1.00. The market value of the company’s common stock at the end of the year was $22. 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 $1.00. The market value of the company’s common stock at the end of the year was $22. All of the company’s sales are on account.
Explanation / Answer
1)Accounts receivable turnover = net credit sales / AVerage receivable
= 81880 / [(10600+7800)/2 ]
= 81880 / [18400/2]
= 81880 / 9200
= 8.9
2)Avergae collection period = 365 /Receivable turnover ratio
= 365 /8.9
= 41.01 days
3)Inventory turnover ratio = COGS /Average inventory
= 34580 / [(12300+12400)/2]
= 34580 /[24700 /2]
= 34580 / 12350
= 2.8
4)Average sale period. = 365 / 2.8
= 130.36
5)operating cycle = Average collection period + Average sale period.
= 41.01+130.36
= 171.37 days
6)Total asset turnover =net sales /avergae total asset
= 81880 / [83634+65512)/2]
= 81880/ [149146/2]
= 81880 / 74573
= 1.10
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