ezto.mheducation.com banSitter Chegg.com canmedia.mheducation.ca/college/o Compa
ID: 2574109 • Letter: E
Question
ezto.mheducation.com banSitter Chegg.com canmedia.mheducation.ca/college/o Comparative financial statements for Weller Corporation, a merchandising company, for the fiscal 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 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 $1.00 last year and $0.65 this year. The market value of the company's common stock at the end of the year was $21. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year Assets Current assets: $ 1,250 1,300 10,800 6,600 12,400 11,100 690 Cash Accounts receivable, net Prepaid expenses Total current assets Property and equipment: 650 25,100 19,690 Land 10,500 10,500 Buildings and equipment, net Total property and equipment Total assets Liabilities and Stockholders' Equity 46,567 43,616 57,067 54,116 $82,167 $73,806 Current liabilities: Accounts payable Accrued liabilities $20,100 $18,100 810 210 1,010 210 Notes payable, short term Total current liabilities Long-term liabilities: Bonds payable 21,320 19,120 9,900 9,900 31,220 29,020 Total liabilities Stockholders' equity: Common stock 500 500 Additional paid-in capital 4,000 4,000 Total paid-in capital Retained eamings 4,500 4,500 46,447 40,286 50,947 44,786 $82,167 $73,806 Total stockholders' equity Total liabilities and stockholders' equity Weller CorporationExplanation / Answer
Answer:
Acid test Ratio = (Cash+Cash Equivalent+Liquid Investment+Short term Recievable)/Current liabilities
viz. (1250+10800)/21320 = 0.56
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