CE Exercise 14-4 (Algo) Financial Ratios for Debt Management [LO14-4] 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 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 $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 $27. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) This YearLast Year Assets Current assets: Cash $ 1,120 1,210 Accounts receivable, net Inventory 9,000 7,200 13,500 11,800 Prepaid expenses Total current assets 630 580 24,250 20,790 Property and equipment: Land Buildings and equipment, net Total property and equipment Total assets 10,100 10,100 45,753 38,249 55,853 48,349 $ $ 80,103 69,139 Liabilities and Stockholders' Equity Current liabilities: Accounts payable Accrued liabilities Total current liabilities $ $ 18,800 17,900 950 860 Notes payable, short term Long-term liabilities: Bonds payable Total liabilities Stockholders' equity: Common stock 8 230 19,750 18,990 9,600 9,600 29,350 28,590 2,000 2,000 Additional paid-in capital 4,000 4,000 Total paid-in capital 6,000 6,000 Retained earnings 44,753 34,549 Total stockholders' equity 50,753 40,549 $ $ Total liabilities and stockholders' equity 80,103 69,139 Sales Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year $ 64,000 $ 76,000 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Sales Cost of goods sold $ 76,000 Last Year $ 64,000 39,000 39,000 Gross margin Selling and administrative expenses: Selling expenses Administrative expenses Total selling and administrative expenses Net operating income Interest expense 37,000 25,000 11,400 10,800 7,300 6,100 18,700 16,900 18,300 8,100 960 960 Net income before taxes 17,340 7,140 Income taxes 6,936 2,856 Net income 10,404 4,284 Dividends to common stockholders 200 375 Net income added to retained earnings 10,204 3,909 Beginning retained earnings 34,549 30,640 Ending retained earnings $44,753 $ 34,549 Required: Compute the following financial ratios for this year: 1. Times interest earned ratio. 2. Debt-to-equity ratio. 3. Equity multiplier. (For all requirements, round your answers to 2 decimal places.) 1. Times interest earned ratio 2. Debt-to-equity ratio 3. Equity multiplier