Compute the Working capital financial data and ratios

Assignment Help Managerial Accounting
Reference no: EM133101873

Problem - Financial Ratios for Assessing Liquidity - 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 600,000 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 this year was $25. 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

$1,180

$1,340

Accounts receivable, net

10,600

8,400

Inventory

12,200

10,800

Prepaid expenses

650

550

Total current assets

24,630

21,090

Property and equipment:

 

 

Land

10,300

10,300

Buildings and equipment, net

44,874

39,332

Total property and equipment

55,174

49,632

Total assets

$79,804

$70,722

Liabilities and Stockholders' Equity

 

 

Current liabilities:

 

 

Accounts payable

$18,600

$19,000

Accrued liabilities

1,050

820

Notes payable, short term

180

180

Total current liabilities

19,830

20,000

Long-term liabilities:

 

 

Bonds payable

8,300

8,300

Total liabilities

28,130

28,300

Stockholders' equity:

 

 

Common stock

600

600

Additional paid-in capital

4,000

4,000

Total paid-in capital

4,600

4,600

Retained earnings

47,074

37,822

Total stockholders' equity

51,674

42,422

Total liabilities and stockholders' equity

$79,804

$70,722

 

Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands)

 

This Year

Last Year

Sales

$75,000

$64,000

Cost of goods sold

40,000

34,000

Gross margin

35,000

30,000

Selling and administrative expenses:

 

 

Selling expenses

11,300

10,100

Administrative expenses

6,700

6,700

Total selling and administrative expenses

18,000

16,800

Net operating income

17,000

13,200

Interest expense

830

830

Net income before taxes

16,170

12,370

Income taxes

6,468

4,948

Net income

9,702

7,422

Dividends to common stockholders

450

240

Net income added to retained earnings

9,252

7,182

Beginning retained earnings

37,822

30,640

Ending retained earnings

$47,074

$37,822

Required - Compute the following financial data and ratios for this year:

1. Working capital.

2. Current ratio.

3. Acid-test ratio.

Reference no: EM133101873

Questions Cloud

How does stress impact theory of noble cause : It is produced by the organization or factors related closely to the organization. How does stress impact the theory of noble cause?
Effective measurement of juvenile delinquency : Briefly explain why you believe this is an effective measurement of juvenile delinquency.
Working on criminal theories project : You will be working on a criminal theories course project. Why is your study of the criminal act warranted?
Difference between laws and ethics? : What is the difference between laws and ethics? How does each fit in the intelligence world?
Compute the Working capital financial data and ratios : The dividend per share of common stock was $0.75 last year and $0.40 this year. Compute the Working capital financial data and ratios
Prepare an income statement for the month of May : The mortgage interest rate is 5%. (The mortgage was taken out on May 1.) Prepare an income statement for the month of May
Describe the nature of orbital interactions : Predict the physical properties resultant from the orbital overlap in varying complexes and Recognise bonding/structure relationships in transition metal
Evaluate results of electronic structure calculations : Evaluate results of electronic structure calculations, critically assess their performance and extract chemically relevant properties
Synthesis and analysis of biological macromolecules : Evaluate experimental data and relate this to the underlying biological processes and Design experimental strategies to synthesise

Reviews

Write a Review

Managerial Accounting Questions & Answers

  Calculate predetermined overhead rate for each department

Company uses a job-order cost system in each of its two manufacturing departments. Calculate predetermined overhead rate for each department

  Find the budgeted net income for december is

Find The budgeted net income for December is. The Bandeiras Corporation, a merchandising firm, has budgeted its activity for December

  How will operating income be affected

Assuming the Pitcher line at Pottery Unlimited is dropped, total fixed costs remain unchanged, how will operating income be affected

  Explain how do companies allocate costs

Explain how do companies allocate costs? While allocation may not affect profit as a whole, if it is not done correctly, it can skew the data on profitability

  What should the selling price per unit be

Using Goal Seek, what should the selling price per unit be in order to realize a breakeven amount of $200? Please explain how to get this with every step

  What is andretti avoidable cost per unit

An outside manufacturer has offered to produce 85,000 Daks and ship them directly to Andretti customers. What is Andretti avoidable cost per unit

  Determine what is the return on equity

Needham Pharmaceuticals, An equity multiplier of 1.5. Its sales are $130 million and it has total assets of $60 million. What is its return on equity (ROE)?

  Definite Communication Apprehension

Definite Communication Apprehension. Describe some strategies that can reduce communication apprehension

  How much would Mariel Co raw material and direct labor cost

Mariel Co. is planning to sell 600 straw hats on April 2021. How much would Mariel Co's raw material and direct labor cost in April

  How many units must be sold to earn net income

If the unit sales price is $20, unit variable cost is $12, and total fixed costs are $800,000, how many units must be sold to earn net income of $400,000

  What is the overhead cost assigned to product s5

What is the overhead cost assigned to Product S5 under activity-based costing? (Round your intermediate calculations to 2 decimal places.)

  What are mr sawyer motives for establishing the percentage

Find the equivalent cost per unit. What are Mr. Sawyer's motives for establishing the percentage of completion at 60 percent rather than 40 percent.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd