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 the year was $28. All of the company's sales are on account Weller Corporation Comparative Balance sheet (dollars in thousands) This Year Last Year $ 1,270 9,300 12,000 740 23,310 $1,260 7,000 12,300 680 21,240 10,100 50,736 60, 36 $84,146 10,100 40,678 50,778 $72,018 Assets Current assets Canh Accounts receivable, net Inventory Prepaid expenses Total current asset Property and equipment Land Buildings and equipment, net Total property and equipment Total suste Liabilities and stockholders' Equity Current liabilities: Accounts payable Accrued liabilities Notes payable, short term Total current liabilities Long-term liabilities: Bonds payable Total liabilities Stockholders' equity Common stock Additional paid-in capital Total paid-in capital Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $19,800 920 $17,600 780 130 18,510 0 20,720 8,700 29,420 3.700 22,210 2,000 4.000 6,000 48,226 54.726 $84,146 2,000 4,000 6,000 38,808 44,808 572,010 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year Sales $72,000 $64,000 Cost of goods sold 37,000 33,000 Gross margin 35,000 31,000 Selling and administrative expenses : Selling expenses 10,800 10,300 Administrative expenses 6,400 6,300 Total selling and administrative expenses 17,200 16,600 Net operating income 17,800 14,400 Interest expense 870 870 Net income before taxes 16,930 13,530 Income taxes 6,772 5,412 Net income 10,158 8,118 Dividends to common stockholders 240 450 Net income added to retained earnings 9,918 7,668 Beginning retained earnings 38,808 31,140 Ending retained earnings $48,726 $38,808 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. 2. 2 3 Times interest earned ratio Debt-to-equity ratio Equity multiplier 3
