4.	Return on equity. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)

Norsk Optronics, ALS, of Bergen, Norway, had a current ratio of 4 on June 30 of the current year. On that date, the companys assets were:

Cash	$	77,000
Accounts receivable, net		440,000
Inventory		670,000
Prepaid expenses		9,000
Plant and equipment, net		1,890,000
Total assets	$	3,086,000

Required:

1.	What was the companys working capital on June 30?

2.	What was the companys acid-test ratio on June 30? (Round your answer to 2 decimal places.)

3.	The company paid an account payable of $44,000 immediately after June 30.

a.

What effect did this transaction have on working capital?

	Working capital would increase.
	Working capital would decrease.
	Working capital would not be affected.

b.

What effect did this transaction have on the current ratio?

	Current ratio would increase.
	Current ratio would decrease.
	Current ratio would not be affected.

Comparative financial statements for Weller Corporation, a merchandising company, for the fiscal year ending December 31 appear below. The company did not issue any new common stock during the year. A total of 500,000 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 $1.25 last year and $0.90 this year. The market value of the companys common stock at the end of the year was $28. All of the companys sales are on account.

Weller Corporation Comparative Balance Sheet (dollars in thousands)
	This Year			Last Year
Assets
Current assets:
Cash	$	1,230		$	1,270
Accounts receivable, net		10,700			8,400
Inventory		12,600			12,200
Prepaid expenses		680			520
Total current assets		25,210			22,390
Property and equipment:
Land		9,100			9,100
Buildings and equipment, net		45,758			37,689
Total property and equipment		54,858			46,789
Total assets	$	80,068		$	69,179
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	20,000		$	19,200
Accrued liabilities		1,050			700
Notes payable, short term		0			280
Total current liabilities		21,050			20,180
Long-term liabilities:
Bonds payable		8,600			8,600
Total liabilities		29,650			28,780
Stockholders' equity:
Common stock		2,000			2,000
Additional paid-in capital		4,000			4,000
Total paid-in capital		6,000			6,000
Retained earnings		44,418			34,399
Total stockholders' equity		50,418			40,399
Total liabilities and stockholders' equity	$	80,068		$	69,179

Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands)
	This Year			Last Year
Sales	$	73,000		$	64,000
Cost of goods sold		36,000			39,000
Gross margin		37,000			25,000
Selling and administrative expenses:
Selling expenses		11,200			10,900
Administrative expenses		7,200			6,600
Total selling and administrative expenses		18,400			17,500
Net operating income		18,600			7,500
Interest expense		860			860
Net income before taxes		17,740			6,640
Income taxes		7,096			2,656
Net income		10,644			3,984
Dividends to common stockholders		625			625
Net income added to retained earnings		10,019			3,359
Beginning retained earnings		34,399			31,040
Ending retained earnings	$	44,418		$	34,399

Required:

Compute the following financial ratios for this year:

1.	Times interest earned ratio. (Round your answer to 1 decimal place.)

2.	Debt-to-equity ratio. (Round your answer to 2 decimal places.)

3.	Equity multiplier. (Round your answer to 2 decimal places.)