Exercise 16-3 (Algo) Financial Ratios for Asset Management [LO16-3] 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 $26. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year Assets Current assets: $ 1,100 9,100 13,600 Cash $ 1,270 Accounts receivable, net 7,800 11,400 510 Inventory Prepaid expenses 640 Total current assets 24,440 20,980 Property and equipment: 10,100 51,805 61,905 $ 86,345 Land 10,100 Buildings and equipment, net Total property and equipment 41,062 51,162 $ 72,142 Total assets Liabilities and Stockholders' Equity Current liabilities: $ 19,900 $ 19,000 Accounts payable Accrued liabilities 980 790 180 180 Notes payable, short term Total current liabilities 21,060 19,970 Long-term liabilities: Bonds payable 9,300 9,300 Total liabilities 30,360 29,270 Stockholders' equity: Common stock 600 600 Additional paid-in capital Total paid-in capital Retained earnings Total stockholders' equity 4,000 4,000 4,600 51,385 4,600 38,272 42,872 55,985 Total liabilities and stockholders' equity $ 86,345 $ 72,142

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Exercise 16-3 (Algo) Financial Ratios for Asset Management (LO16-3]
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 $26. All of the company's sales are on account.
Weller Corporation
Comparative Balance Sheet
(dollars in thousands)
This Year Last Year
Assets
Current assets:
$ 1,270
7,800
11,400
510
$ 1,100
9,100
Cash
Accounts receivable, net
Inventory
Prepaid expenses
13,600
640
Total current assets
24,440
20,980
Property and equipment:
Land
10,100
10,100
Buildings and equipment, net
Total property and equipment
51,805
61,905
41,062
51,162
Total assets
$ 86,345
$ 72,142
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
$ 19,900
$ 19,000
Accrued liabilities
980
790
180
180
Notes payable, short term
Total current liabilities
21,060
19,970
Long-term liabilities:
Bonds payable
9,300
9,300
Total liabilities
30,360
29,270
Stockholders' equity:
Common stock
600
600
Additional paid-in capital
Total paid-in capital
Retained earnings
Total stockholders' equity
4,000
4,600
ם4,00
4,600
38,272
42,872
$ 72,142
51,385
55,985
Total liabilities and stockholders' equity
$ 86,345
Transcribed Image Text:Exercise 16-3 (Algo) Financial Ratios for Asset Management (LO16-3] 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 $26. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year Assets Current assets: $ 1,270 7,800 11,400 510 $ 1,100 9,100 Cash Accounts receivable, net Inventory Prepaid expenses 13,600 640 Total current assets 24,440 20,980 Property and equipment: Land 10,100 10,100 Buildings and equipment, net Total property and equipment 51,805 61,905 41,062 51,162 Total assets $ 86,345 $ 72,142 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 19,900 $ 19,000 Accrued liabilities 980 790 180 180 Notes payable, short term Total current liabilities 21,060 19,970 Long-term liabilities: Bonds payable 9,300 9,300 Total liabilities 30,360 29,270 Stockholders' equity: Common stock 600 600 Additional paid-in capital Total paid-in capital Retained earnings Total stockholders' equity 4,000 4,600 ם4,00 4,600 38,272 42,872 $ 72,142 51,385 55,985 Total liabilities and stockholders' equity $ 86,345
Weller Corporation
Comparative Income Statement and Reconciliation
(dollars in thousands)
This Year Last Year
$ 78,585
37,500
$ 64,000
34,000
Sales
Cost of goods sold
Gross margin
Selling and administrative expenses:
Selling expenses
Administrative expenses
Total selling and administrative expenses
Net operating income
Interest expense
41,085
30,000
10,600
7,300
10,500
6,600
17,100
17,900
12,900
930
23,185
930
Net income before taxes
22,255
11,970
8,902
13,353
Income taxes
4,788
Net income
7,182
Dividends to common stockholders
240
450
Net income added to retained earnings
13,113
38,272
6,732
31,540
Beginning retained earnings
Ending retained earnings
$ 51,385
$ 38,272
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.)
1. Accounts receivable turnover
9.30
2. Average collection period
39.25 days
3. Inventory turnover
3.00
4. Average sale period
days
5. Operating cycle
days
6. Total asset turnover
Transcribed Image Text:Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year $ 78,585 37,500 $ 64,000 34,000 Sales Cost of goods sold Gross margin Selling and administrative expenses: Selling expenses Administrative expenses Total selling and administrative expenses Net operating income Interest expense 41,085 30,000 10,600 7,300 10,500 6,600 17,100 17,900 12,900 930 23,185 930 Net income before taxes 22,255 11,970 8,902 13,353 Income taxes 4,788 Net income 7,182 Dividends to common stockholders 240 450 Net income added to retained earnings 13,113 38,272 6,732 31,540 Beginning retained earnings Ending retained earnings $ 51,385 $ 38,272 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.) 1. Accounts receivable turnover 9.30 2. Average collection period 39.25 days 3. Inventory turnover 3.00 4. Average sale period days 5. Operating cycle days 6. Total asset turnover
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