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 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 $24. 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	$	1,220		$	1,270
Accounts receivable, net		10,800			7,600
Inventory		12,500			11,100
Prepaid expenses		790			500
Total current assets		25,310			20,470
Property and equipment:
Land		10,800			10,800
Buildings and equipment, net		50,485			36,149
Total property and equipment		61,285			46,949
Total assets	$	86,595		$	67,419
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	20,300		$	18,500
Accrued liabilities		990			740
Notes payable, short term		290			290
Total current liabilities		21,580			19,530
Long-term liabilities:
Bonds payable		8,100			8,100
Total liabilities		29,680			27,630
Stockholders' equity:
Common stock		700			700
Additional paid-in capital		4,000			4,000
Total paid-in capital		4,700			4,700
Retained earnings		52,215			35,089
Total stockholders' equity		56,915			39,789
Total liabilities and stockholders' equity	$	86,595		$	67,419

Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands)
	This Year			Last Year
Sales	$	83,720		$	65,000
Cost of goods sold		35,400			38,000
Gross margin		48,320			27,000
Selling and administrative expenses:
Selling expenses		11,100			10,900
Administrative expenses		7,400			7,000
Total selling and administrative expenses		18,500			17,900
Net operating income		29,820			9,100
Interest expense		810			810
Net income before taxes		29,010			8,290
Income taxes		11,604			3,316
Net income		17,406			4,974
Dividends to common stockholders		280			525
Net income added to retained earnings		17,126			4,449
Beginning retained earnings		35,089			30,640
Ending retained earnings	$	52,215		$	35,089

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