ezto.mheducation.com ia mheducation.ca rbanSitter Chegg.com company, for the yea
ID: 2574118 • Letter: E
Question
ezto.mheducation.com ia mheducation.ca rbanSitter Chegg.com company, for the year ending Comparative financial statements for Weller Corporation, a y new common stock during the year. A total of shares of common stock were outstanding. The interest rate on the bonds, which were sold at their 600,000 face value, was 10%. The income tax rate was 40% and the dividend per share of common stock was $0.40 this year. The market value of the company's common stock at the end of the year was $27. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year Assets Current assets: Accounts receivable, net Inventory Prepaid expenses $ 1,150 1,390 9,400 7,800 3,400 11,300 630 550 Total current assets 24,580 21,040 Property and equipment Land 10,500 10,500 Buildings and equipment, net Total property and equipment Total assets Liabilities and Stockholders' Equity 50,833 40,676 61,333 51,176 $85,913 $72,216 Current liabilities: Accounts payable Accrued liabilities Notes payable, short term $19,900 $19,200 730 160 1,070 160 21,130 20,090 9,400 9,400 30,530 29,490 Total current liabilities Long-term liabilities: Total liabilities Stockholders' equity: Bonds payable 600 600 Common stock Additional paid-in capital 4,000 4,000 4,600 4,600 Total paid-in capital Retained earnings 50,783 38,126 55,383 42,726 $85,913 $72.216 Total stockholders' equity Total liabilities and stockholders' equityExplanation / Answer
Answer:
Accounts receivable turn over ratio = net credit sales/ Average accounts receivable
Sales : 79120
1. Average accounts receivable = (7800 + 9400)/2 (( begining year + end of the year)/2 ) = 8600
Accounts receivable turn over ratio = 79120 / 8600 = 9.20 is the ratio
2.Average Collection period =365 days / accounts receivable turnover ratio
Average Collection period = 365/ 9.20 = 39.67 days
3. Inventory turnover = Cost of goods sold/ average inventory during that period
COGS = 38285
Average inventory = ( begining inventory + ending inventory)/2 = (13400+11300)/2 = 12350
Inventory turnover = 38285 / 12350 =3.10
4.Average Sales period = Annual sales / no of days in period = 79120 / 365 = 216.76
5.Operating cycle or cash conversion cycle formula :
days inventory outstanding + days sales outstanding -Days payable outstanding
Days inventory outstanding = Average Inventory / cost of sales * 365 = ((9400+7800)/2)/38285 =8600/38285 =81.99
Days sales outstanding = average accounts receivable /net credit sales *365 = 12350/79120*365 = 56.97
Days payable outstanding = average Accounts payable/ cost of sales *365 = ((19900+19200)/2)/38285 *365 = 186.35
Operating cycle = 81.99 + 56.97 = 138.96
Days payable outstanding is subtracted from this to get net operating cycle = 138.96-186.35 = -47.42
6.Total asset turnover : Net sales /Average total assets = 79120 / (85913 +72216) /2 = 79120/ 79064.5 = 1.000702
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.