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 bond payable was 10%, the income tax rate was 40%, and the dividend per share of common stock was $0.75 last year and $0.40 this year. The market value of the company’s common stock at the end of the year was $29. 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	$	1,100		$	1,220
Accounts receivable, net		10,100			6,800
Inventory		12,200			11,000
Prepaid expenses		630			540
Total current assets		24,030			19,560
Property and equipment:
Land		9,800			9,800
Buildings and equipment, net		44,324			37,157
Total property and equipment		54,124			46,957
Total assets	$	78,154		$	66,517
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	20,400		$	18,400
Accrued liabilities		940			720
Notes payable, short term		120			120
Total current liabilities		21,460			19,240
Long-term liabilities:
Bonds payable		8,300			8,300
Total liabilities		29,760			27,540
Stockholders' equity:
Common stock		700			700
Additional paid-in capital		4,000			4,000
Total paid-in capital		4,700			4,700
Retained earnings		43,694			34,277
Total stockholders' equity		48,394			38,977
Total liabilities and stockholders' equity	$	78,154		$	66,517

Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands)
	This Year			Last Year
Sales	$	70,000		$	65,000
Cost of goods sold		35,000			41,000
Gross margin		35,000			24,000
Selling and administrative expenses:
Selling expenses		10,600			10,300
Administrative expenses		7,000			6,600
Total selling and administrative expenses		17,600			16,900
Net operating income		17,400			7,100
Interest expense		830			830
Net income before taxes		16,570			6,270
Income taxes		6,628			2,508
Net income		9,942			3,762
Dividends to common stockholders		525			525
Net income added to retained earnings		9,417			3,237
Beginning retained earnings		34,277			31,040
Ending retained earnings	$	43,694		$	34,277

Required:

Compute the following financial data and ratios for this year:

1. Working capital. (Enter your answer in thousands.)

2. Current ratio. (Round your answer to 2 decimal places.)

3. Acid-test ratio. (Round your answer to 2 decimal places.)

Answer 1