value 0.00 points Comparative financial statements for Weller Corporation, a mer

Question

value 0.00 points 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 700,000 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 $0.40 this year. The market value of the company's common stock at the end of the 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 Accounts receivable, net Inventory Prepaid expenses $1,170 $ 1,330 6,600 12,300 11,500 690 10,200 600 Total current assets 24,270 20,120 Property and equipment: Land 9,000 9,000 Buildings and equipment, net Total property and equipment Total assets Liabilities and Stockholders' Equity 43,45439,939 2,45448,939 $76,724 $69,059 Current liabilities Accounts payable Accrued liabilities $19,300 $19,200 890 220 900 220 Notes payable, short term Total current liabilities Long-term liabilities 20,420 20,310 8,600 8,600 29,020 28,910 Bonds payable otal liabilities Stockholders' equity: Common stock Additional paid-in capital 700 4,000 700 4,000 4.700 4.700 Total paid-in capital Retained earnings 43,00435,449 47,704 40.149 $76,724 $69,059 Total stockholders' equity Total liabilities and stockholders' equity

Explanation / Answer

Answer:-The financial data for this year are as follows:-

1)- Accounts receivable turnover ratio = Net credit sales/Average accounts receivable

                                                          = $74760/($6600+$10200/2)

                                                          =$74760/$8400 = 8.9 times

2)- Average collection period = Average Account receivable / Net sales*365

                                                         OR

                                         365 days/ Accounts receivable turnover ratio

                                               =365 days/8.9 =41.01 days

3)- Inventory turnover ratio= Cost of goods sold/Average inventory

                                            =$41650/($12300+$11500/2)

                                            =$41650/$11900 =3.5 times

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