Comparative financial statements for Weller Corporation, a merchandising company
ID: 2579577 • 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 700,000 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 $26. 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 year ending December 31 appear below. The company did not issue any new common stock during the year. A total of 700,000 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 $26. All of the company’s sales are on account.
Explanation / Answer
Answer:
1
Accounts Receivable Turnover
= Net sales / Avearge account recivable Net
Beginning balance, accounts receivable (a)
7700
Ending balance, accounts receivable (b)
11000
Average accounts receivable balance [(a) + (b)]/2
9350
=84150 /9350
=9
___________________________________
2
Average collection period.
=365 / Accounts Receivable Turnover
=365 /9
=40.5555
=40.56
___________________________________
3
Inventory turnover
=Cost of goods sold / Avearage inventory Balance
Beginning balance, inventory (a)
11600
Ending balance, inventory (b)
12900
Average inventory balance [(a) + (b)]/2
12250
= 44100 /12250
=3.6
______________________________________________
4
Average sale period
= 365/ Inventory turnover
=365/3.6
=101.39
______________________________________
5
Operating cycle.
=Inventory period + Account recivable period
=40.56+101.39
=141.95
___________________________________
6
Total asset turnover
=Sales / Average total Assets
=84150/ [($81537 + $66766)/2]
=84150 /74151.5
=1.13
Beginning balance, accounts receivable (a)
7700
Ending balance, accounts receivable (b)
11000
Average accounts receivable balance [(a) + (b)]/2
9350
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.