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 this year was $24. All of the company's sales are on account.Required:1. Accounts receivable turnover. (Assume that all sales are on account.) (Round your answer to 2 decimal places.)2. Average collection period. (Use 365 days in a year. Round your intermediate calculations and final answer to 2 decimal places.)3. Inventory turnover. (Round your answer to 2 decimal places.)4. Average sale period. (Use 365 days in a year. Round your intermediate calculations and final answer to 2 decimal places.)5. Operating cycle. (Round your intermediate calculations and final answer to 2 decimal places.)6. Total asset turnover. (Round your answer to 2 decimal places.) Weller CorporationComparative Balance Sheet(dollars in thousands)This Year Last YearAssetsCurrent assets:$ 1,310$ 1,11010,60012,100770CashAccounts receivable, net7,60011,100InventoryPrepaid expenses630Total current assets24,58020,640Property and equipment:Land9,6009,60047,218Buildings and equipment, net39,678Total property and equipment56,81849,278Total assets$81,398$69,918Liabilities and Stockholders' EquityCurrent liabilities:Accounts payable$18,7001,090140$19,300Accrued liabilities830Notes payable, short term140Total current liabilities19,93020,270Long-term liabilities:Bonds payable8,2008,200Total liabilities28,13028,470Stockholders' equity:Common stock600600Additionall paid-in capitalTotal paid-in capitalRetained earnings4,0004,0004,60048,6684,60036,848Total stockholders' equity53,26841,448Total liabilities and stockholders' equity$81,398$69,918 Weller CorporationComparative Income Statement and Reconciliation(dollars in thousands)This Year Last YearSales$78,260$65,000Cost of goods soldGross margin39,44037,00038,82028,000Selling and administrative expenses:Selling expenses11,3006, 60010,1006,90017,00011,000820Administrative expenses17,900Total selling and administrative expensesNet operating incomeInterest expenseNet income before taxes20,92082020,1008,04010,180Income taxes4,07212,060240Net income6,108Dividends to common stockholders600Net income added to retained earnings11,82036,8485,508Beginning retained earnings31,340Ending retained earnings$48,668$36,848

Account Receivable Turnover Ratio shows the relationship between Net credit sales and average…

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Cornerstones of Financial Accounting

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Publisher:Jay Rich, Jeff Jones

Chapter12: Fainancial Statement Analysis

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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 this year was $24. All of the company's sales are on account.

Required:
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. (Round your answer to 2 decimal places.)

Weller Corporation
Comparative Balance Sheet
(dollars in thousands)
This Year Last Year
Assets
Current assets:
$ 1,310
$ 1,110
10,600
12,100
770
Cash
Accounts receivable, net
7,600
11,100
Inventory
Prepaid expenses
630
Total current assets
24,580
20,640
Property and equipment:
Land
9,600
9,600
47,218
Buildings and equipment, net
39,678
Total property and equipment
56,818
49,278
Total assets
$81,398
$69,918
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
$18,700
1,090
140
$19,300
Accrued liabilities
830
Notes payable, short term
140
Total current liabilities
19,930
20,270
Long-term liabilities:
Bonds payable
8,200
8,200
Total liabilities
28,130
28,470
Stockholders' equity:
Common stock
600
600
Additionall paid-in capital
Total paid-in capital
Retained earnings
4,000
4,000
4,600
48,668
4,600
36,848
Total stockholders' equity
53,268
41,448
Total liabilities and stockholders' equity
$81,398
$69,918

Weller Corporation
Comparative Income Statement and Reconciliation
(dollars in thousands)
This Year Last Year
Sales
$78,260
$65,000
Cost of goods sold
Gross margin
39,440
37,000
38,820
28,000
Selling and administrative expenses:
Selling expenses
11,300
6, 600
10,100
6,900
17,000
11,000
820
Administrative expenses
17,900
Total selling and administrative expenses
Net operating income
Interest expense
Net income before taxes
20,920
820
20,100
8,040
10,180
Income taxes
4,072
12,060
240
Net income
6,108
Dividends to common stockholders
600
Net income added to retained earnings
11,820
36,848
5,508
Beginning retained earnings
31,340
Ending retained earnings
$48,668
$36,848

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