Exercise $16-3($Algo$)$ Financial Ratios for Asset Management $[$LO$16-3]$

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 $$0\mathrm{.}75$ last year and $$0\mathrm{.}40$ this year. The market value of the company$$s common stock at the end of this year was $$21.$ 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 $ $1,100$ $ $1,380$

Accounts receivable, net $9,1007,600$

Inventory $13,80010,800$

Prepaid expenses $780600$

Total current assets $24,78020,380$

Property and equipment:

Land $9,9009,900$

Buildings and equipment, net $44,20539,820$

Total property and equipment $54,10549,720$

Total assets $ $78,885$ $ $70,100$

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable $ $20,300$ $ $18,800$

Accrued liabilities $970900$

Notes payable, short term $270270$

Total current liabilities $21,54019,970$

Long$-$term liabilities:

Bonds payable $9,0009,000$

Total liabilities $30,54028,970$

Stockholders' equity:

Common stock $600600$

Additional paid$-$in capital $4,0004,000$

Total paid$-$in capital $4,6004,600$

Retained earnings $43,74536,530$

Total stockholders' equity $48,34541,130$

Total liabilities and stockholders' equity $ $78,885$ $ $70,100$

Weller Corporation

Comparative Income Statement and Reconciliation

$($dollars in thousands$)$

This Year Last Year

Sales $ $72,645$ $ $65,000$

Cost of goods sold $41,82037,000$

Gross margin $30,82528,000$

Selling and administrative expenses:

Selling expenses $10,80010,000$

Administrative expenses $6,7006,700$

Total selling and administrative expenses $17,50016,700$

Net operating income $13,32511,300$

Interest expense $900900$

Net income before taxes $12,42510,400$

Income taxes $4,9704,160$

Net income $7,4556,240$

Dividends to common stockholders $240450$

Net income added to retained earnings $7,2155,790$

Beginning retained earnings $36,53030,740$

Ending retained earnings $ $43,745$ $ $36,530$

Required:

Compute the following financial data for this year:

Accounts receivable turnover. $($Assume all sales are on account.$)$

Note: Round your answer to $2$ decimal places.

Average collection period.

Note: Use $365$ days in a year. Round your intermediate calculations and final answer to $2$ decimal places.

Inventory turnover.

Note: Round your answer to $2$ decimal places.

Average sale period.

Note: Use $365$ days in a year. Round your intermediate calculations and final answer to $2$ decimal places.

Operating cycle.

Note: Round your intermediate calculations and final answer to $2$ decimal places.

Total asset turnover.

Note: Round your answer to $2$ decimal places.Exercise $16-3($Algo$)$ Financial Ratios for Asset Management $[$LO$16-3]$

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\mathrm{.}75$ last

year and $$0\mathrm{.}40$ this year. The market value of the company's common stock at the end of this year was $$21.$ All of the company's sales

are on account.

Required:

Compute the following financial data for this year:

Accounts receivable turnover. $($Assume all sales are on account.$)$

Note: Round your answer to $2$ decimal places.

Average collection period.

Note: Use $365$ days in a year. Round your intermediate calculations and final answer to $2$ decimal places.

Inventory turnover.

Note: Round your answer to $2$ decimal places.

Average sale period.

Note: Use $365$ days in a year. Round your intermediate calculations and final answer to $2$ decimal places.

Operating cycle.

Note: Round your intermediate calculations and final answer to $2$ decimal places.

Total asset turnover.

Note: Round your answer to $2$ decimal places.