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 $20. All of the company's sales are on account.

Explanation / Answer

Ratio Formula Calculation Ratio Accounts Receivable Turnover Net Credit Sales/ Average Accounts Receivable 74060/8050 9.2 Average Collection Period 365/Accounts Receivable Turnover 365/9.2 39.67 Inventory Turnover COGS/ Average Inventory 42670/12550 3.4 Average Sale Period 365/Inventory Turnover 365/3.4 107.35 Operating Cycle Average Sale Period+Average Collection Period 39.67+107.35 147.02 Total Assets Turnover Net Sales/ Average Total Assets 74060/75719 0.98 Net Credit Sales                  74,060.00 Average Accounts Receivable (9600+6500)/2      8,050.00 COGS                  42,670.00 Average Inventory (13600+11500)/2    12,550.00 Net Sales                  74,060.00 Average Total Assets (79400+72038)/2    75,719.00

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