A comparative income statement is given below for McKenzie Sales, Ltd., of Toronto:

McKenzie Sales, Ltd. Comparative Income Statement
	This Year			Last Year
Sales	$	7,360,000		$	5,593,600
Cost of goods sold		4,750,000			3,507,000
Gross margin		2,610,000			2,086,600
Selling and administrative expenses:
Selling expenses		1,371,000			1,076,000
Administrative expenses		709,500			614,000
Total expenses		2,080,500			1,690,000
Net operating income		529,500			396,600
Interest expense		102,000			89,000
Net income before taxes	$	427,500		$	307,600

Members of the companys board of directors are surprised to see that net income increased by only $119,900 when sales increased by $1,766,400.

Required:

1. Express each year's income statement in common-size percentages. (Round your percentage answers to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)

.

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 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 companys common stock at the end of this year was $26. All of the companys sales are on account.

Weller Corporation Comparative Balance Sheet (dollars in thousands)
	This Year			Last Year
Assets
Current assets:
Cash	$	1,210		$	1,360
Accounts receivable, net		10,700			8,000
Inventory		13,000			11,000
Prepaid expenses		770			630
Total current assets		25,680			20,990
Property and equipment:
Land		9,700			9,700
Buildings and equipment, net		42,196			37,083
Total property and equipment		51,896			46,783
Total assets	$	77,576		$	67,773
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	19,000		$	19,000
Accrued liabilities		1,020			700
Notes payable, short term		290			290
Total current liabilities		20,310			19,990
Long-term liabilities:
Bonds payable		9,200			9,200
Total liabilities		29,510			29,190
Stockholders' equity:
Common stock		700			700
Additional paid-in capital		4,000			4,000
Total paid-in capital		4,700			4,700
Retained earnings		43,366			33,883
Total stockholders' equity		48,066			38,583
Total liabilities and stockholders' equity	$	77,576		$	67,773

Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands)
	This Year			Last Year
Sales	$	71,000		$	64,000
Cost of goods sold		35,000			40,000
Gross margin		36,000			24,000
Selling and administrative expenses:
Selling expenses		11,300			10,800
Administrative expenses		7,100			6,500
Total selling and administrative expenses		18,400			17,300
Net operating income		17,600			6,700
Interest expense		920			920
Net income before taxes		16,680			5,780
Income taxes		6,672			2,312
Net income		10,008			3,468
Dividends to common stockholders		525			525
Net income added to retained earnings		9,483			2,943
Beginning retained earnings		33,883			30,940
Ending retained earnings	$	43,366		$	33,883

Required:

Compute the following financial data and ratios for this year:

1. Working capital. (Enter answer in thousands.)

2. Current ratio. (Round your answer to 2 decimal places.)

3. Acid-test ratio. (Round your answer to 2 decimal places.)

Garrison 16e Rechecks 2017-09-30, 2017-12-04