Comparative financial statements for Woller Corporation, a December 31 appear be

Question

Comparative financial statements for Woller Corporation, a 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 g company, for the year ending face value was 10% The nome tax rate was 40% and the dividend per share of common stock was so 40 this year. The market value of the company's common slock at the end of the year was $21. All of the company's sales are on account Weiler Comparative Balance Sheet (dollars in thousands) This Year Last Year Assets Current assets: Cash Accounts receivablo, net Inventory Propaid expenses s 1,140 1,270 10,700 7.200 13,200 12.500 570 670 Total current assets 25,710 21,540 Property and equipment Land Buildings and equipment, net 10,400 10,400 46,580 38.864 58,960 49.264 $82,670 $70,804 Total property and equipment Total assets Liabilities and Stockholders' Equity Current liablities Accounts payable Accrued liabilities Notes payable, short term $19,800 $18,400 230 230 21,120 19,370 9,6009,600 30,72028,970 1,090 Total current labilities Long-term liabiltios Bonds payable Total labilities Common stock 600600 Additional paid-in capital 4,0004,000 Total paid-in capital Retained earnings 4,600 4,600 47,350 37,234 51,950 41,834 $82,670 $TO,804 Total stockholders' equity Total liabilities and stockholders' equity Weller Corporation Comparative Income Statement and Reconciliation dollars in thousands) Sales Cost of goods sold This Year Last Year $81,445 $65,000 44,975 35,000 Gross margin 36,470 30,000

Explanation / Answer

Soltion :

Accounts Receivable Turnover =   Net Annual Credit Sales ( sales) ÷ ((Beginning Accounts           Receivable + Ending Accounts Receivable) / 2)

                                                = $ 81,445 / ( $ 7200 + $ 10700)

                                                = 9.1

Average Collection Period = Days in period * Average Accounts receivables / Net credit sales per day

                                           = $ 3266750* / $ 81445

                                           = 40.10

*Working note :

Average accounts receivable = ( $ 7200 + $ 10700 ) / 2

                                                 = $ 8950

                                                 = $ 8950 * 365

                                                  = $ 3266750

Inventory turnover ratio = Cost of goods sold / Average Inventory

                                              = $ 44975 / ($ 12500+ $ 13200) /2

                                              = 3.5

Average Sale Period            = total sales of the year / days of work in the year (365 days )

                                              = $ 81445 / 365

                                              = 223.13

Operating Cycle                     = Days Inventory Outstanding + Days Sales Outstanding

                                                =   365 / $ 44975 * $ 12850

                                               = 104.28

Total Assets Turnover Ratio =    Net Sales ÷ Average Total Assets

                                                   = $ 81445 / ( $ 70804 + $ 82670)/2

                                                   = 1.06

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