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 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 $1.00 last year and $0.65 this year. The market value of the company’s common stock at the end of the year was $25. All of the company’s sales are on account.

Acid-test ratio. (Round your answer to 2 decimal places.)

please show all work and calculations

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 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 $1.00 last year and $0.65 this year. The market value of the company’s common stock at the end of the year was $25. All of the company’s sales are on account.

Explanation / Answer

1. Working capital = Current assets-current liabilities

                           = 23610-21780

Working capital =1830

2. Current ratio = Current assets/current liabilities

                       = 23610/21780

Current ratio = 1.08;1

3) Acid test ratio = ( Current assets-Inventory-prepaid exp)/Current liabilities

                          = (23610-12000-750)/21780

Acid test ratio = 0.50;1

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