Comparative financial statements for Weller Corporation, a men ending December 3
ID: 2793827 • Letter: C
Question
Comparative financial statements for Weller Corporation, a men 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 $0.75. The market value of the company's common stock at the end of the year was $28. All of the company's sales are on account. chandising 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 $1,220 1,250 9,600 8,200 12,500 11,100 620 720 Total current assets 24,040 21,170 Property and equipment: Land Buildings and equipment, net 9,500 9,500 40,156 39,338 49,656 48,838 $73,696 $70,008 Total property and equipment Total assets Liabilities and Stockholders' Equity Current liabilities Accounts payable Accrued liabilities Notes payable, short term $18,500 $17,900 790 1,070 Total current liabilities Long-term liabilities 19,680 18,800 8,700 28,380 27,500 Bonds payable 8,700 Total liabilities Stockholders' equity: Common stock Additional paid-in capital 600 4,000 600 4,000 Total paid-in capital Retained earnings 4,600 4,600 40,716 37,908 45,316 42,508 $73,696 $70,008 Total stockholders' equity Total liabilities and stockholders' equityExplanation / Answer
Working capital = Current assets - current Liabilities
Working capital = 24040 - 19680 = 4360
Current ratio = Current assets / Current liabilities
Current ratio = 24040 / 19680 = 1.22
Acid-test ratio = Quick Assets / Current Liabilities
Acid-test ratio = (24040 - 12500 - 720) / 19680 = 0.55
2)
Accounts receivable turnover = Sales / Average Accounts Receivables = 76925 / ((10100 + 8000) / 2) = 8.50
Average collection period = 365 / Accounts receivable turnover = 365 / 8.50 = 42.94 days
Inventory turnover = COGS / Average Inventory = 40320 / ((12600 + 12600) / 2) = 3.20
Average sale period = 365 / Inventory turnover = 365 / 3.20 = 114.06 days
Operating cycle = Average collection period + Average sale period = 42.94 + 114.06 = 157.00 days
Total asset turnover = Sales / Average Total assets = 76925 / ((83237 + 70612) / 2) = 1.00
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