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 500,000 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.

Weller Corporation Comparative Balance Sheet (dollars in thousands)
	This Year			Last Year
Assets
Current assets:
Cash	$	1,180		$	1,360
Accounts receivable, net		10,300			6,500
Inventory		13,700			11,400
Prepaid expenses		680			570
Total current assets		25,860			19,830
Property and equipment:
Land		9,100			9,100
Buildings and equipment, net		44,495			41,405
Total property and equipment		53,595			50,505
Total assets	$	79,455		$	70,335
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	19,700		$	18,500
Accrued liabilities		1,100			810
Notes payable, short term		190			190
Total current liabilities		20,990			19,500
Long-term liabilities:
Bonds payable		9,500			9,500
Total liabilities		30,490			29,000
Stockholders' equity:
Common stock		500			500
Additional paid-in capital		4,000			4,000
Total paid-in capital		4,500			4,500
Retained earnings		44,465			36,835
Total stockholders' equity		48,965			41,335
Total liabilities and stockholders' equity	$	79,455		$	70,335

Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands)
	This Year			Last Year
Sales	$	77,280		$	65,000
Cost of goods sold		45,180			37,000
Gross margin		32,100			28,000
Selling and administrative expenses:
Selling expenses		11,200			10,500
Administrative expenses		6,900			6,600
Total selling and administrative expenses		18,100			17,100
Net operating income		14,000			10,900
Interest expense		950			950
Net income before taxes		13,050			9,950
Income taxes		5,220			3,980
Net income		7,830			5,970
Dividends to common stockholders		200			375
Net income added to retained earnings		7,630			5,595
Beginning retained earnings		36,835			31,240
Ending retained earnings	$	44,465		$	36,835

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