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.)
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 the year was $23. 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 | $ | 1,200 | $ | 1,330 | ||
| 9,700 | 8,000 | |||||
| Inventory | 12,900 | 11,500 | ||||
| Prepaid expenses | 740 | 510 | ||||
| Total current assets | 24,540 | 21,340 | ||||
| Property and equipment: | ||||||
| Land | 10,000 | 10,000 | ||||
| Buildings and equipment, net | 46,641 | 35,406 | ||||
| Total property and equipment | 56,641 | 45,406 | ||||
| Total assets | $ | 81,181 | $ | 66,746 | ||
| Liabilities and |
||||||
| Current liabilities: | ||||||
| Accounts payable | $ | 18,500 | $ | 17,900 | ||
| Accrued liabilities | 930 | 700 | ||||
| Notes payable, short term | 140 | 140 | ||||
| Total current liabilities | 19,570 | 18,740 | ||||
| Long-term liabilities: | ||||||
| Bonds payable | 9,400 | 9,400 | ||||
| Total liabilities | 28,970 | 28,140 | ||||
| Stockholders' equity: | ||||||
| Common stock | 600 | 600 | ||||
| Additional paid-in capital | 4,000 | 4,000 | ||||
| Total paid-in capital | 4,600 | 4,600 | ||||
| 47,611 | 34,006 | |||||
| Total stockholders' equity | 52,211 | 38,606 | ||||
| Total liabilities and stockholders' equity | $ | 81,181 | $ | 66,746 | ||
| Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) |
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| This Year | Last Year | |||||
| Sales | $ | 80,535 | $ | 65,000 | ||
| Cost of goods sold | 37,820 | 40,000 | ||||
| Gross margin | 42,715 | 25,000 | ||||
| Selling and administrative expenses: | ||||||
| Selling expenses | 11,400 | 10,900 | ||||
| Administrative expenses | 7,300 | 6,800 | ||||
| Total selling and administrative expenses | 18,700 | 17,700 | ||||
| Net operating income | 24,015 | 7,300 | ||||
| Interest expense | 940 | 940 | ||||
| Net income before taxes | 23,075 | 6,360 | ||||
| Income taxes | 9,230 | 2,544 | ||||
| Net income | 13,845 | 3,816 | ||||
| Dividends to common stockholders | 240 | 450 | ||||
| Net income added to retained earnings | 13,605 | 3,366 | ||||
| Beginning retained earnings | 34,006 | 30,640 | ||||
| Ending retained earnings | $ | 47,611 | $ | 34,006 | ||
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.
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