Comparative financial statements for Weller Corporation, a merchandising company

Question

Comparative financial statements for Weller Corporation, a merchandising company, for the fiscal year encing December 31 appear belaw. The company did not issue ay new common stock during the year. A total of 500,000 sharea of common slock were outatanding. The intereat rate on the bonds, which were sold at their face value, was 10%. The income tax rate was 40% and he, dividend per share of Dommon stock was $1.25 last year and 30.90 this year. The market value of the companys common stock at the end of the year was $20. All of the company's saies are an account Weller Coporation Comparaive Balance Sheet dollars in thousands This Year Last Year Assets Current a88ets: 1,110 1,340 6,700 3.400 10,600 Accounts receivable, net ,800 Prepaid expenses 830 Total oument essets 24,940 19,17O Property and equipment: 0,000 0,000 Land Buildings and equipment, net 42.629 41,557 52,829 51,557 $77,569 $70,727 Total property and equipment Liabilities and Stockholders' Equity Current Eabltiee $20,000 $17,800 Accounts payable Accrued iabilties 1,090 Notes payable, short term 21,200 18,720 9,800 9,800 1,000 20,520 Total current liablities Long-term liablities Eonds payable Total lablites Stockhciders' equity Common stock 500 500 Additional paid-in capital 4,000 4,000 4,500 Total paid-in caphal Retained eamings 4,500 42,069 37,707 46,569 42,207 $77,589 70,727 Total stockholders' equity Total Fabilities and stockholders equity Weller Coporation compathe lnoome Statment and Reconciliation dollars in thousands This Year Last Year $68,000 $64,000 41.000 34,000 Cost of goods sold Gross margin 27,000 30,000 Selling and administrative expenses Selling expenses Administrative expenses 1.400 0,500 6,600 6,200 8,000 16,700 9,000 13,300 Total seling and administrative expenses Net operating income Interest expense 980 980 Net income before taxes Income taxes 8,020 12.320 3.208 4,928 Net income Dividenda to common stochoidera 4,812 450 625 Net income adced to retained eamings Beginning retained camings 4,362 6,767 7,70730,940 Encing retained eamings 542,069 37,707 Compute the tollowing financial data and ratica for this year 1. Working capital. Enter your answer in thousands) Working capital 2. Current rabo (Round your answer to 2 decimal places.) Current ratio . Acidtest ratio (Round your answer to 2 decimal places Acid-est ratio

Explanation / Answer

Weller Corporation 1) Working Capital=Current Assets-Current Liabilities Current Assets= $                              24,940.00 Current Liabilities= $                              21,200.00 Working Capital=Current Assets-Current Liabilities=($24940-$21200) $                                 3,740.00 2) Current Ratio=Current Assets/Current Liabilities This Year Total Current Assets $                              24,940.00 Total Current Liabilites $                              21,200.00 Current Ratio ($24940/$21200)=1.18:1 3) Acid Test Ratio=Quik Assets/Current Liabilites Quick assets=Current Assets-Inventory-Prepaid Expenses Quick assets=($24940-$13400-$630) $                              10,910.00 Current Liabilities $                              21,200.00 Quick Ratio=($10910/$21200) ($10910/$21200)=.51:1

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