Comparative financial statements for Weller Corporation, a me ending December 31

Question

Comparative financial statements for Weller Corporation, a me ending December 31 appear below. The company did not issue any new common stock during the year. A total of 800,000 shares of common stock were outstanding. The interest rate on the bonds, which were sold at their face value, was 12%. 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 the year was $18. All of the company's sales are on account. rchandising company, for the fiscal year Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year Assets Current assets: Cash Accounts receivable, net Inventory Prepaid expenses $1,280 1,560 9,100 9,700 8,200 2,100 12,300 1,800 Total current assets 25,080 20,960 Property and equipment: Land Buildings and equipment, net 6,000 6,000 19,200 19,000 25,200 25,000 $50,280 $45,960 Total property and equipment Total assets Liabilities and Stockholders' Equity Current liabilities Accounts payable Accrued liabilities Notes payable, short term $ 9,500 $ 8,300 700 300 600 300 10,400 5,000 9,300 5,000 15,400 14,300 Total current liabilities Long-term liabilities Bonds payable Total liabilities Stockholders' equity: Common stock Additional paid-in capital 800 800 4,200 4,200 5,000 Total paid-in capital Retained earnings 5,000 29,880 26,660 34,880 31,660 $50,280 $45,960 Total stockholders' equity Total liabilities and stockholders' equity

Explanation / Answer

1. Working capital = Current assets - Current liabilities

= 25,080 - 10,400

= 14,680.

2. Current ratio = Current assets / Current liabilities

= 25,080 / 10,400

= 2.41 times.

3. Acid test ratio = (Cash + Accounts receivable) / Current liabilities

= (1,280 + 12,300) / 10,400

= 1.31 times.

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