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 500,000 shares of common stock were outstanding. The interest rate on the bond payable was 10%, the income tax rate was 40%, and the dividend per share of common stock was $0.75. The market value of the company

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 500,000 shares of common stock were outstanding. The interest rate on the bond payable was 10%, the income tax rate was 40%, and the dividend per share of common stock was $0.75. The market value of the company

Explanation / Answer

Answers:

1. Account Recievables Turnover = Net Credit Sales / Avge Account recievables

= 72240/ ( 10300+6500) /2

= 8.6

2. Average Collection Period = 365 / Recivable turnover

= 365 /8.6 = 42.442 days

3. Inventory turnover = COG's / average Inventory

= 45900 / (14000+11500) / 2 = 3.6

4. Average sale period = 365 / Inventory turnover

= 365 / 3.6 = 101.38 days

5. operating Cycle=

Operating Cycle = Days' Sales of Inventory + Days Sales Outstanding

365 / purchases * Average inventory ) + ( 365/ credit sales * average account recievable

365 / 45900 * 12750 + ( 365/ 72240 * 8400

= 101.389 + 42.442 = 143.83 days approx

6. total asset tunover = net sales / Average total assets

= 72240 / (75854 + 69975) / 2 = 0.991

Thanks

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