Comparative financial statements for Weller Corporation, a merchandising company, for the year ending December 31 appear below.
Question:
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%.
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 $30. All of the companys sales are on account.
Weller Corporation Comparative Balance Sheet (dollars in thousands) | ||||||
This Year | Last Year | |||||
Assets | ||||||
Current assets: | ||||||
Cash | $ | 1,110 | $ | 1,280 | ||
Accounts receivable, net | 10,100 | 7,700 | ||||
Inventory | 12,900 | 12,200 | ||||
Prepaid expenses | 610 | 670 | ||||
Total current assets | 24,720 | 21,850 | ||||
Property and equipment: | ||||||
Land | 10,300 | 10,300 | ||||
Buildings and equipment, net | 46,675 | 35,158 | ||||
Total property and equipment | 56,975 | 45,458 | ||||
Total assets | $ | 81,695 | $ | 67,308 | ||
Liabilities and Stockholders' Equity | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 18,700 | $ | 18,700 | ||
Accrued liabilities | 950 | 870 | ||||
Notes payable, short term | 100 | 100 | ||||
Total current liabilities | 19,750 | 19,670 | ||||
Long-term liabilities: | ||||||
Bonds payable | 8,700 | 8,700 | ||||
Total liabilities | 28,450 | 28,370 | ||||
Stockholders' equity: | ||||||
Common stock | 600 | 600 | ||||
Additional paid-in capital | 4,000 | 4,000 | ||||
Total paid-in capital | 4,600 | 4,600 | ||||
Retained earnings | 48,645 | 34,338 | ||||
Total stockholders' equity | 53,245 | 38,938 | ||||
Total liabilities and stockholders' equity | $ | 81,695 | $ | 67,308 | ||
Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) | ||||||
This Year | Last Year | |||||
Sales | $ | 79,210 | $ | 64,000 | ||
Cost of goods sold | 36,395 | 40,000 | ||||
Gross margin | 42,815 | 24,000 | ||||
Selling and administrative expenses: | ||||||
Selling expenses | 10,800 | 10,900 | ||||
Administrative expenses | 6,900 | 6,400 | ||||
Total selling and administrative expenses | 17,700 | 17,300 | ||||
Net operating income | 25,115 | 6,700 | ||||
Interest expense | 870 | 870 | ||||
Net income before taxes | 24,245 | 5,830 | ||||
Income taxes | 9,698 | 2,332 | ||||
Net income | 14,547 | 3,498 | ||||
Dividends to common stockholders | 240 | 300 | ||||
Net income added to retained earnings | 14,307 | 3,198 | ||||
Beginning retained earnings | 34,338 | 31,140 | ||||
Ending retained earnings | $ | 48,645 | $ | 34,338 | ||
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.)