Wiemers Corporation’s comparative balance sheets are presented below. WIEMERS CO

Question

Wiemers Corporation’s comparative balance sheets are presented below.

WIEMERS CORPORATION
Balance Sheets
December 31

2017

2016

Wiemers’s 2017 income statement included net sales of $104,000, cost of goods sold of $59,600, and net income of $16,000.

Compute the following ratios for 2017. (Round Debt to assets ratio to 1 decimal place, e.g. 1.6, or 1.6% and all other answers to 2 decimal places, e.g. 1.64, or 1.64% .)

  

  

WIEMERS CORPORATION
Balance Sheets
December 31

2017

2016

Cash $ 3,700 $ 3,400 Accounts receivable (net) 20,800 23,800 Inventory 10,300 7,000 Land 19,600 26,500 Buildings 69,600 69,600 Accumulated depreciation—buildings (14,500 ) (10,000 )     Total $109,500 $120,300 Accounts payable $ 12,100 $ 31,000 Common stock 74,800 70,000 Retained earnings 22,600 19,300     Total $109,500 $120,300

Explanation / Answer

a) Current ratio 2.876:1 Current Assets=Cash+Inventory+AR Current Assets=3700+20800+10300=34800 Current Liabilities=AP=12100 Current Ratio=Current Assets/Current Liabilities 34800/12100=2.876 (b) Acid-test ratio 2.024:1 Current Assets-Inventory=34800-10300=24500 Acid Test Ratio=(Current Assets-Inventory)/Current Liabilities 24500/12100 2.024793 (c) Accounts receivable turnover 4.663 times Average AR=(AR in the Beginning of the Year+AR at the end of the Year)/2 Average AR=(23800+20800)/2=44600/2=22300 Accounts Receivable Turnover=Net Sales/Average AR 104000/22300 4.663677 (d) Inventory turnover 6.89 times Average Inventory=(Inventory at the Beginning of the Year+Inventory at the end of the year)/2 (7000+10300)/2 8650 Inventory turnover=Cost of Goods Sold/Average Inventory 59600/8650 6.890173 (e) Profit margin 15.38 % Net Profit/Sales*100 16000/104000*100 15.38462 (f) Asset turnover 0.905135 times Total Assets in 2016=3400+23800+7000+26500+59600=120300 Total Assets in 2017=3700+20800+10300+19600+55100=109500 Average Total Assets=(120300+109500)/2=114900 Asset Turn Over=Net Sales/Average Total Assets 0.905135 (g) Return on assets 13.92 % Net Income/Average Assets*100 16000/114900*100 13.92515 (h) Return on common stockholders’ equity 17.1398 Average Common Stocke Holders Equity=(Stockholding in the Beginning+Stockholding in the End)/2 (89300+97400)/2 93350 Return on Common Stock Holders Equity=Net Income/Average Stockholding*100 17.1398 (i) Debt to assets ratio 1 % There are no Debts

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