Question

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 $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:
Cash	$	1,170		$	1,310
Accounts receivable, net		10,700			6,500
Inventory		13,900			11,000
Prepaid expenses		630			550
Total current assets		26,400			19,360
Property and equipment:
Land		10,600			10,600
Buildings and equipment, net		47,353			43,830
Total property and equipment		57,953			54,430
Total assets	$	84,353		$	73,790
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	20,500		$	18,400
Accrued liabilities		1,060			750
Notes payable, short term		300			300
Total current liabilities		21,860			19,450
Long-term liabilities:
Bonds payable		10,000			10,000
Total liabilities		31,860			29,450
Stockholders' equity:
Common stock		700			700
Additional paid-in capital		4,000			4,000
Total paid-in capital		4,700			4,700
Retained earnings		47,793			39,640
Total stockholders' equity		52,493			44,340
Total liabilities and stockholders' equity	$	84,353		$	73,790

Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands)
	This Year			Last Year
Sales	$	79,120		$	66,000
Cost of goods sold		46,065			33,000
Gross margin		33,055			33,000
Selling and administrative expenses:
Selling expenses		10,900			11,000
Administrative expenses		7,100			6,000
Total selling and administrative expenses		18,000			17,000
Net operating income		15,055			16,000
Interest expense		1,000			1,000
Net income before taxes		14,055			15,000
Income taxes		5,622			6,000
Net income		8,433			9,000
Dividends to common stockholders		280			700
Net income added to retained earnings		8,153			8,300
Beginning retained earnings		39,640			31,340
Ending retained earnings	$	47,793		$	39,640

Required:

Compute the following financial data for this year:

1.	Accounts receivable turnover. (Assume that all sales are on account.) (Round your answer to 2 decimal places.)

      

2.	Average collection period. (Use 365 days in a year. Round your intermediate calculations and final answer to 2 decimal places.)

       

3.	Inventory turnover. (Round your answer to 2 decimal places.)

       

4.	Average sale period. (Use 365 days in a year. Round your intermediate calculations and final answer to 2 decimal places.)

       

5.	Operating cycle. (Round your intermediate calculations and final answer to 2 decimal places.)

       

6.	Total asset turnover. (Round your answer to 2 decimal places.)

        

Answer 1