The short-term assets which are used for day-to-day operation of a business are called working capital of the business. It is computed by deducting the current liabilities from the current assets of a business.
A current ratio measures a company’s ability to pay back its short term liabilities by the current assets of the company. It is ascertained by dividing the current assets by the current liabilities of the company.
Acid-Test Ratio:
It measures the company’s ability to pay back its current liabilities by the quick assets of the company. Quick assets are those current assets which can be converted into cash in a very short period of time.
Computation of following financial data and ratios for this year:
1. Working capital
2. Current ratio
3. Acid-test ratio
![Check Mark](/static/check-mark.png)
Want to see the full answer?
Check out a sample textbook solution![Blurred answer](/static/blurred-answer.jpg)
Chapter 14 Solutions
Introduction to Managerial Accounting - Connect Access
- 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 930,000 shares of common stock were outstanding. The interest rate on the bond payable was 12%, 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 $24.50. All of the company’s sales are on account. Required: Compute the following financial data for this year to fill the table: A. Earnings per share. (Round your answer to 2 decimal places.) B. Price-earnings ratio. (Round your intermediate calculations and final answer to 2 decimal places.) C. Dividend payout ratio. (Round your intermediate calculations and final answer to 2 decimal places.) D. Dividend yield ratio. (Round your intermediate calculations and final answer to 2 decimal places.) E. Book…arrow_forwardComparative 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 940,000 shares of common stock were outstanding. The interest rate on the bond payable was 12%, 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 $25. All of the company’s sales are on account. Weller CorporationComparative Balance Sheet(dollars in thousands) This Year Last Year Assets Current assets: Cash $ 5,304 $ 5,350 Accounts receivable, net 15,800 10,450 Inventory 10,400 8,760 Prepaid expenses 1,940 2,380 Total current assets 33,444 26,940 Property and equipment: Land 7,400 7,400 Buildings and equipment, net 20,600 20,400 Total property and equipment 28,000 27,800 Total assets $ 61,444 $ 54,740…arrow_forwardComparative 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 970,000 shares of common stock were outstanding. The interest rate on the bond payable was 12%, 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 $26.50. All of the company's sales are on account. Assets Current assets: Cash Accounts receivable, net Inventory Prepaid expenses Total current assets Property and equipment: Land Buildings and equipment, net Total property and equipment Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable Accrued liabilities Weller Corporation Comparative Balance Sheet (dollars in thousands) Notes payable, short term Total current liabilities Long-term liabilities: Bonds payable Total…arrow_forward
- 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 970,000 shares of common stock were outstanding. The interest rate on the bond payable was 12 % , 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 $26.50. All of the company's sales are on account. Assets Current assets: Cash Accounts receivable, net Inventory Prepaid expenses Total current assets. Property and equipment: Land Buildings and equipment, net Total property and equipment Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable Accrued liabilities Notes payable, short term liabilities Total current Long-term liabilities: Bonds payable Total liabilities Stockholders' equity: Common stock Weller Corporation…arrow_forwardComparative 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 980,000 shares of common stock were outstanding. The interest rate on the bond payable was 12%, 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 $27.00. All of the company’s sales are on account. Weller CorporationComparative Balance Sheet(dollars in thousands) This Year Last Year Assets Current assets: Cash $ 4,568 $ 5,440 Accounts receivable, net 16,200 9,150 Inventory 10,600 8,920 Prepaid expenses 1,980 2,460 Total current assets 33,348 25,970 Property and equipment: Land 7,800 7,800 Buildings and equipment, net 21,000 20,800 Total…arrow_forwardComparative 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 900,000 shares of common stock were outstanding. The interest rate on the bond payable was 12%, 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 $23. All of the company's sales are on account. Required:Compute the following financial data for this year: 1. Gross margin percentage. (Round your percentage answer to 1 decimal place.)2. Net profit margin percentage. (Round your percentage answer to 1 decimal place.)3. Return on total assets. (Round your percentage answer to 1 decimal place.)4. Return on equity. (Round your percentage answer to 2 decimal places.)arrow_forward
- 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 890,000 shares of common stock were outstanding. The interest rate on the bond payable was 12%, 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 $22. All of the company’s sales are on account. Weller CorporationComparative Balance Sheet(dollars in thousands) This Year Last Year Assets Current assets: Cash $ 4,774 $ 5,550 Accounts receivable, net 15,300 10,200 Inventory 10,150 8,560 Prepaid expenses 1,890 2,280 Total current assets 32,114 26,590 Property and equipment: Land 6,900 6,900 Buildings and equipment, net 20,100 19,900 Total…arrow_forwardComparative 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 890,000 shares of common stock were outstanding. The interest rate on the bond payable was 12%, 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 $22. All of the company’s sales are on account. Weller CorporationComparative Balance Sheet(dollars in thousands) This Year Last Year Assets Current assets: Cash $ 4,774 $ 5,550 Accounts receivable, net 15,300 10,200 Inventory 10,150 8,560 Prepaid expenses 1,890 2,280 Total current assets 32,114 26,590 Property and equipment: Land 6,900 6,900 Buildings and equipment, net 20,100 19,900 Total…arrow_forwardComparative 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 890,000 shares of common stock were outstanding. The interest rate on the bond payable was 12%, 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 $22. All of the company’s sales are on account. Weller CorporationComparative Balance Sheet(dollars in thousands) This Year Last Year Assets Current assets: Cash $ 4,774 $ 5,550 Accounts receivable, net 15,300 10,200 Inventory 10,150 8,560 Prepaid expenses 1,890 2,280 Total current assets 32,114 26,590 Property and equipment: Land 6,900 6,900 Buildings and equipment, net 20,100 19,900 Total…arrow_forward
- 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 890,000 shares of common stock were outstanding. The interest rate on the bond payable was 12%, 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 $22. All of the company’s sales are on account. Weller CorporationComparative Balance Sheet(dollars in thousands) This Year Last Year Assets Current assets: Cash $ 4,774 $ 5,550 Accounts receivable, net 15,300 10,200 Inventory 10,150 8,560 Prepaid expenses 1,890 2,280 Total current assets 32,114 26,590 Property and equipment: Land 6,900 6,900 Buildings and equipment, net 20,100 19,900 Total…arrow_forwardComparative 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 860,000 shares of common stock were outstanding. The interest rate on the bond payable was 12%, 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 $21. All of the company’s sales are on account. Weller CorporationComparative Balance Sheet(dollars in thousands) This Year Last Year Assets Current assets: Cash $ 976 $ 1,920 Accounts receivable, net 15,000 10,050 Inventory 10,000 8,440 Prepaid expenses 1,860 2,220 Total current assets 27,836 22,630 Property and equipment: Land 6,600 6,600 Buildings and equipment, net 19,800 19,600 Total…arrow_forwardComparative 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 860,000 shares of common stock were outstanding. The interest rate on the bond payable was 12%, 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 $21. All of the company’s sales are on account. Weller CorporationComparative Balance Sheet(dollars in thousands) This Year Last Year Assets Current assets: Cash $ 976 $ 1,920 Accounts receivable, net 15,000 10,050 Inventory 10,000 8,440 Prepaid expenses 1,860 2,220 Total current assets 27,836 22,630 Property and equipment: Land 6,600 6,600 Buildings and equipment, net 19,800 19,600 Total…arrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
![Text book image](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)