Exercise 16-2 (Algo) Financial Ratios for Assessing Liquidity [LO16-2] Comparative financial statements for Weller Corporation, a...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Exercise 16-2 (Algo) Financial Ratios for Assessing Liquidity [LO16-2] Comparative financial statements for Weller Corporation, a merchandising company, for the year ending December 31 appear below. The company did not issue any common stock during the year. A total of 700,000 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 $24. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year Assets Current assets: Cash Accounts receivable, net Inventory Prepaid expenses Total current assets Property and equipment: Land Buildings and equipment, net Total property and equipment Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable Accrued liabilities Notes payable, short term Total current liabilities Long-term liabilities: Bonds payable Total liabilities. Stockholders' equity: Common stock Additional paid-in capital Total paid-in capital Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 1,260 10,600 12,200 770 $ 1,320 7,200 11,800 530 24,830 20,850 9,900 9,900 42,303 37,744 52,203 47,644 $ 77,033 $ 68,494 $18,800 $18,800 930 800 120 120 19,850 19,720 9,100: 9,100 28,950 28,820 700 700 4,000 4,000 4,700 4,700 43,383 34,974 48,083 39,674 $ 77,033 $ 68,494 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year Sales $ 75,000 $65,000 Cost of goods sold 41,000 40,000 Gross margin 34,000 25,000 Selling and administrative expenses: Selling expenses 11,200 10,500 Administrative expenses 7,000 6,400 Total selling and administrative expenses 18,200 16,900 Net operating income 15,800 8,100 Interest expense 910 910 Net income before taxes 14,890 7,190 Income taxes 5,956 2,876 Net income 8,934 4,314 Dividends to common stockholders 525 280 Net income added to retained earnings 8,409 4,034 Beginning retained earnings 34,974 30,940 Ending retained earnings $ 43,383 $ 34,974 Required: Compute the following financial data and ratios for this year: 1. Working capital. Note: Enter your answer in thousands. 2. Current ratio. Note: Round your answer to 2 decimal places. 3. Acid-test ratio. Note: Round your answer to 2 decimal places. 1. Working capital 2. Current ratio 3. Acid-test ratio Exercise 16-2 (Algo) Financial Ratios for Assessing Liquidity [LO16-2] Comparative financial statements for Weller Corporation, a merchandising company, for the year ending December 31 appear below. The company did not issue any common stock during the year. A total of 700,000 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 $24. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year Assets Current assets: Cash Accounts receivable, net Inventory Prepaid expenses Total current assets Property and equipment: Land Buildings and equipment, net Total property and equipment Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable Accrued liabilities Notes payable, short term Total current liabilities Long-term liabilities: Bonds payable Total liabilities. Stockholders' equity: Common stock Additional paid-in capital Total paid-in capital Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 1,260 10,600 12,200 770 $ 1,320 7,200 11,800 530 24,830 20,850 9,900 9,900 42,303 37,744 52,203 47,644 $ 77,033 $ 68,494 $18,800 $18,800 930 800 120 120 19,850 19,720 9,100: 9,100 28,950 28,820 700 700 4,000 4,000 4,700 4,700 43,383 34,974 48,083 39,674 $ 77,033 $ 68,494 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year Sales $ 75,000 $65,000 Cost of goods sold 41,000 40,000 Gross margin 34,000 25,000 Selling and administrative expenses: Selling expenses 11,200 10,500 Administrative expenses 7,000 6,400 Total selling and administrative expenses 18,200 16,900 Net operating income 15,800 8,100 Interest expense 910 910 Net income before taxes 14,890 7,190 Income taxes 5,956 2,876 Net income 8,934 4,314 Dividends to common stockholders 525 280 Net income added to retained earnings 8,409 4,034 Beginning retained earnings 34,974 30,940 Ending retained earnings $ 43,383 $ 34,974 Required: Compute the following financial data and ratios for this year: 1. Working capital. Note: Enter your answer in thousands. 2. Current ratio. Note: Round your answer to 2 decimal places. 3. Acid-test ratio. Note: Round your answer to 2 decimal places. 1. Working capital 2. Current ratio 3. Acid-test ratio
Expert Answer:
Posted Date:
Students also viewed these accounting questions
-
What were the measures taken by Alex to pinpoint the bottleneck in the factory's operations, and subsequently, how did he capitalize on and enhance the bottleneck production? Task: Herbie, the boy...
-
Automakers provide an interesting study in cost management strategies. General Motors often provides a contrast to other U.S. manufacturers. For example, Chrysler and Ford opted to outsource many...
-
The completed financial statement columns of the worksheet for Bray Company are shown as follows. Instructions (a) Prepare an income statement, an owners equity statement, and a classified balance...
-
Johnson & Johnson discloses in its annual report that costs associated with advertising are expensed in the year incurred and are included in selling, marketing and administrative expenses on the...
-
Ken Jones, an architect, organized Jones Architects on April 1, 2014. During the month, Jones Architects completed the following transactions: a. Transferred cash from a personal bank account to an...
-
6) If the coupon rate equals the required rate of return, the price of the bond a. should be above its par value. b. should be below its par value. c. should be equal to its par value. d. is...
-
What is the smallest radius of an unbanked (flat) track around which a bicyclist can travel if her speed is 29.2 km/h and the coefficient of static friction between tires and track is.228? Number SIM...
-
A local barbershop cuts the hair of 1,300 customers per month. The clients are men, and the barbers offer no special styling. During the month of May, 1,300 customers were serviced. The cost of...
-
Explain the positive and negative aspects of speculation in financial markets.
-
what is a reason for using just one rate , a long term yield as the average cost of debt financing for a firm that has multiple issues of debt wtih varyiny maturities?
-
What recommendations can help her organize ideas in planning stage old writing step?
-
Based on analysis, deck-building business is best Only consider what is an added cost and different from current business, if shifting things from current business to new then do not include
-
Determine the proceeds from each of the preceding sales of customer notes receivable Assume a 360day year Do not round intermediate calculations When required round your final answers to the nearest...
-
Fahrad Inc. sells all of its product on account. Fahrad has the following accounts receivable payment experience: Percent paid in the month of sale .........10 Percent paid in the month after the...
-
A DFD is a representation of which of the following? a. relationship among modules, data, and programs of an AIS b. flow of data in an organization c. decision rules in a computer program d. computer...
-
Which of the following statements is false? a. Flowcharts make use of many symbols. b. A flowchart emphasizes the flow of documents or records containing data. c. DFDs help convey the timing of...
-
For each of the following scenarios identify which data processing method (batch or online, real-time) would be the most appropriate. a. Make an airline reservation b. Register for a university...
Study smarter with the SolutionInn App