4. Average sale period 5. Operating cycle 104.06 x days 145.06 days
Comparative financial statements for Weller Corporation, a merchandising company, for the year 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 bond payable was 10%, 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 this year was $22. All of the company’s sales are on account.
| Weller Corporation Comparative (dollars in thousands) |
||
| This Year | Last Year | |
|---|---|---|
| Assets | ||
| Current assets: | ||
| Cash | $ 1,230 | $ 1,310 |
| 10,500 | 7,900 | |
| Inventory | 12,500 | 12,200 |
| Prepaid expenses | 770 | 550 |
| Total current assets | 25,000 | 21,960 |
| Property and equipment: | ||
| Land | 9,100 | 9,100 |
| Buildings and equipment, net | 49,348 | 37,336 |
| Total property and equipment | 58,448 | 46,436 |
| Total assets | $ 83,448 | $ 68,396 |
| Liabilities and |
||
| Current liabilities: | ||
| Accounts payable | $ 18,900 | $ 17,900 |
| Accrued liabilities | 1,100 | 890 |
| Notes payable, short term | 230 | 230 |
| Total current liabilities | 20,230 | 19,020 |
| Long-term liabilities: | ||
| Bonds payable | 8,900 | 8,900 |
| Total liabilities | 29,130 | 27,920 |
| Stockholders' equity: | ||
| Common stock | 600 | 600 |
| Additional paid-in capital | 4,000 | 4,000 |
| Total paid-in capital | 4,600 | 4,600 |
| 49,718 | 35,876 | |
| Total stockholders' equity | 54,318 | 40,476 |
| Total liabilities and stockholders' equity | $ 83,448 | $ 68,396 |
| Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) |
||
| This Year | Last Year | |
|---|---|---|
| Sales | $ 81,880 | $ 65,000 |
| Cost of goods sold | 39,520 | 38,000 |
| Gross margin | 42,360 | 27,000 |
| Selling and administrative expenses: | ||
| Selling expenses | 11,400 | 10,400 |
| Administrative expenses | 6,600 | 6,400 |
| Total selling and administrative expenses | 18,000 | 16,800 |
| Net operating income | 24,360 | 10,200 |
| Interest expense | 890 | 890 |
| Net income before taxes | 23,470 | 9,310 |
| Income taxes | 9,388 | 3,724 |
| Net income | 14,082 | 5,586 |
| Dividends to common stockholders | 240 | 450 |
| Net income added to retained earnings | 13,842 | 5,136 |
| Beginning retained earnings | 35,876 | 30,740 |
| Ending retained earnings | $ 49,718 | $ 35,876 |
Required:
Compute the following financial data for this year:
1. Accounts receivable turnover. (Assume that all sales are on account.) (Round your answer to 2 decimal places.)
2. Average collection period. (Use 365 days in a year. Round your intermediate calculations and final answer to 2 decimal places.)
3. Inventory turnover. (Round your answer to 2 decimal places.)
4. Average sale period. (Use 365 days in a year. Round your intermediate calculations and final answer to 2 decimal places.)
5. Operating cycle. (Round your intermediate calculations and final answer to 2 decimal places.)
6. Total asset turnover. (Round your answer to 2 decimal places.)
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