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 800,000 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 $18. All of the company’s sales are on account.
Weller Corporation Comparative Balance Sheet (dollars in thousands) |
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This Year | Last Year | |||||
Assets | ||||||
Current assets: | ||||||
Cash | $ | 1,280 | $ | 1,560 | ||
Accounts receivable, net | 12,300 | 9,100 | ||||
Inventory | 9,700 | 8,200 | ||||
Prepaid expenses | 1,800 | 2,100 | ||||
Total current assets | 25,080 | 20,960 | ||||
Property and equipment: | ||||||
Land | 6,000 | 6,000 | ||||
Buildings and equipment, net | 19,200 | 19,000 | ||||
Total property and equipment | 25,200 | 25,000 | ||||
Total assets | $ | 50,280 | $ | 45,960 | ||
Liabilities and Stockholders' Equity | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 9,500 | $ | 8,300 | ||
Accrued liabilities | 600 | 700 | ||||
Notes payable, short term | 300 | 300 | ||||
Total current liabilities | 10,400 | 9,300 | ||||
Long-term liabilities: | ||||||
Bonds payable | 5,000 | 5,000 | ||||
Total liabilities | 15,400 | 14,300 | ||||
Stockholders' equity: | ||||||
Common stock | 800 | 800 | ||||
Additional paid-in capital | 4,200 | 4,200 | ||||
Total paid-in capital | 5,000 | 5,000 | ||||
Retained earnings | 29,880 | 26,660 | ||||
Total stockholders' equity | 34,880 | 31,660 | ||||
Total liabilities and stockholders' equity | $ | 50,280 | $ | 45,960 | ||
Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) |
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This Year | Last Year | |||||
Sales | $ | 79,000 | $ | 74,000 | ||
Cost of goods sold | 52,000 | 48,000 | ||||
Gross margin | 27,000 | 26,000 | ||||
Selling and administrative expenses: | ||||||
Selling expenses | 8,500 | 8,000 | ||||
Administrative expenses | 12,000 | 11,000 | ||||
Total selling and administrative expenses | 20,500 | 19,000 | ||||
Net operating income | 6,500 | 7,000 | ||||
Interest expense | 600 | 600 | ||||
Net income before taxes | 5,900 | 6,400 | ||||
Income taxes | 2,360 | 2,560 | ||||
Net income | 3,540 | 3,840 | ||||
Dividends to common stockholders | 320 | 600 | ||||
Net income added to retained earnings | 3,220 | 3,240 | ||||
Beginning retained earnings | 26,660 | 23,420 | ||||
Ending retained earnings | $ | 29,880 | $ | 26,660 | ||
Compute the following financial data and ratios for this year: 1 working capital 2. current ratio 3. acid-test ratio 5. accounts receivable turnover (assume all sales are on account) 6. average collection period 7. inventory turnover 8. average sale period 9. operating cycle 10. total asset turnover 11.times interest earned ratio 12. debt-to-equity ratio 13. equity multiplier
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