ch 16, 3

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 companys common stock at the end of this year was $25. All of the companys sales are on account.

Weller Corporation Comparative Balance Sheet (dollars in thousands)
	This Year	Last Year
Assets
Current assets:
Cash	$ 1,250	$ 1,370
Accounts receivable, net	10,200	8,000
Inventory	12,700	10,800
Prepaid expenses	770	600
Total current assets	24,920	20,770
Property and equipment:
Land	10,300	10,300
Buildings and equipment, net	43,678	39,384
Total property and equipment	53,978	49,684
Total assets	$ 78,898	$ 70,454
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$ 19,700	$ 18,900
Accrued liabilities	950	870
Notes payable, short term	0	110
Total current liabilities	20,650	19,880
Long-term liabilities:
Bonds payable	8,100	8,100
Total liabilities	28,750	27,980
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	44,148	36,474
Total stockholders' equity	50,148	42,474
Total liabilities and stockholders' equity	$ 78,898	$ 70,454

Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands)
	This Year	Last Year
Sales	$ 70,000	$ 64,000
Cost of goods sold	38,000	37,000
Gross margin	32,000	27,000
Selling and administrative expenses:
Selling expenses	11,500	10,300
Administrative expenses	6,500	6,000
Total selling and administrative expenses	18,000	16,300
Net operating income	14,000	10,700
Interest expense	810	810
Net income before taxes	13,190	9,890
Income taxes	5,276	3,956
Net income	7,914	5,934
Dividends to common stockholders	240	600
Net income added to retained earnings	7,674	5,334
Beginning retained earnings	36,474	31,140
Ending retained earnings	$ 44,148	$ 36,474

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. (For all requirements, round your answers to 2 decimal places.) 1. Times interest earned ratio 2. Debt-to-equity ratio 3. Equity multiplier