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 bond payable was 10%, the income tax rate was 40%, and the dividend per share of common stock was $0.75 last year and $0.40 this year. The market value of the company's common stock at the end of this year was $23. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year Assets Current assets: Cash Accounts receivable, net Inventory Prepaid expenses 10,300 13,500 790 1,170 1,330 7,600 12,200 560 21,690 Total current assets 25,760 Property and equipment: Land Buildings and equipment, net Total property and equipment Total assets Liabilities and Stockholders Equity Current liabilities: 10,200 46,664 56,864 $82,624 10,200 41,362 51,562 $73,252 Accounts payable Accrued liabilities Notes payable, short term $20,500 18,700 780 170 19,650 1,090 170 21,760 Total current liabilities Long-term liabilities: Bonds payable 9,800 9,800 31,56029:130 Total liabilities Stockholders' equity: Common stock 500 500 Additional paid-in capital Total paid-in capital Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 11000 4,000 4,500 46,564 51,064 $82,624 4,500 39,302 43,802 $73,252

Explanation / Answer

Total Current Assets - Total Current Liabilities

= $25,760 - $21,760

Total Current Assets / Total Current Liabilities

= $25,760 / $21,760

[Total Current Assets - Inventory - Prepaid Exp] / Total Current Liabilities

= ($25,760 - $13,500 - $790) / $21,760

Formula & working Total 1 Working Capital

Total Current Assets - Total Current Liabilities

= $25,760 - $21,760

$4,000 2 Current Ratio

Total Current Assets / Total Current Liabilities

= $25,760 / $21,760

1.18 3 Acid - test ratio

[Total Current Assets - Inventory - Prepaid Exp] / Total Current Liabilities

= ($25,760 - $13,500 - $790) / $21,760

0.53

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