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 $30. 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. $1,220 $1,280

Accounts receivable, net 9,100 8,100

Inventory 14,000 11,100

Prepaid expenses 710 650

Total current assets 25,030 21,130

Property and equipment:

Land 9,000 9,000

Buildings and equipment, net 48,890 42,200

Total property and equipment 57,890 51,200

Total assets $82,920 $72,330

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable $19,400 $18,200

Accrued liabilities 1,080 780

Notes payable, short term 0 120

Total current liabilities 20,480 19,100

Long-term liabilities:

Bonds payable 9,500 9,500

Total liabilities 29,980 28,600

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 46,940 37,730

Total stockholders' equity 52,940 43,730

Total liabilities and stockholders' equity

$82,920 $72,330

Weller Corporation

Comparative Income Statement and Reconciliation

(dollars in thousands)

This Year Last Year

Sales $74,000 $64,000

Cost of goods sold 40,000 35,000

Gross margin 34,000 29,000

Selling and administrative expenses:

Selling expenses 10,900 10,400

Administrative expenses 6,400 6,000

Total selling and administrative expenses 17,300 16,400

Net operating income 16,700 12,600

Interest expense 950 950

Net income before taxes 15,750 11,650

Income taxes 6,300 4,660

Net income 9,450 6,990

Dividends to common stockholders 240 600

Net income added to retained earnings 9,210 6,390

Beginning retained earnings 37,730 31,340

Ending retained earnings $46,940 $37,730

Required: The following financial ratios for this year:

1. Times interest earned ratio.

2. Debt-to-equity ratio.

3. Equity multiplier.