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 700,000 shares of common stock were outstanding. The interest rate on the bonds, which were sold at their face value, was 10%. The income tax rate was 40% and the dividend per share of common stock was $0.40 this year. The market value of the company’s common stock at the end of the year was $29. 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	$	1,090		$	1,210
Accounts receivable, net		10,700			8,200
Inventory		12,800			11,500
Prepaid expenses		730			520
Total current assets		25,320			21,430
Property and equipment:
Land		9,200			9,200
Buildings and equipment, net		49,654			38,639
Total property and equipment		58,854			47,839
Total assets	$	84,174		$	69,269
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	20,000		$	18,500
Accrued liabilities		1,080			820
Notes payable, short term		140			140
Total current liabilities		21,220			19,460
Long-term liabilities:
Bonds payable		9,600			9,600
Total liabilities		30,820			29,060
Stockholders' equity:
Common stock		700			700
Additional paid-in capital		4,000			4,000
Total paid-in capital		4,700			4,700
Retained earnings		48,654			35,509
Total stockholders' equity		53,354			40,209
Total liabilities and stockholders' equity	$	84,174		$	69,269

Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands)
	This Year			Last Year
Sales	$	83,160		$	65,000
Cost of goods sold		42,525			38,000
Gross margin		40,635			27,000
Selling and administrative expenses:
Selling expenses		10,700			10,200
Administrative expenses		6,600			6,600
Total selling and administrative expenses		17,300			16,800
Net operating income		23,335			10,200
Interest expense		960			960
Net income before taxes		22,375			9,240
Income taxes		8,950			3,696
Net income		13,425			5,544
Dividends to common stockholders		280			875
Net income added to retained earnings		13,145			4,669
Beginning retained earnings		35,509			30,840
Ending retained earnings	$	48,654		$	35,509

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. (Round your answer to 2 decimal places.)

        

Answer 1