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 $21. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year $ 1,140 9,300 12,000 620 23,060 $ 1,300 7,900 11,700 620 21.520 Assets Current assets Cash Accounts receivable, net Inventory Prepaid expenses Total current assets Property and equipment: Land Buildings and equipment, net Total property and equipment Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable Accrued liabilities Notes payable, short term Total current liabilities Long-term liabilities: 9.700 47.655 57,355 $80,415 9.700 36,495 46,195 $67,715 200 $19,000 770 270 20,040 90 8,500 28,699 8,509 28,540 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 2,000 4,000 6,000 45,725 51,725 $80,415 2,000 4,000 6,009 33, 175 39,175 $67,715 Last Year $65,000 42,000 23,000 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Sales $76,000 Cost of goods sold 36,000 Gross margin 40,000 Selling and administrative expenses: Selling expenses 11,300 Administrative expenses 6,600 Total selling and administrative expenses 17,900 Net operating income Interest expense Net income before taxes Income Net income Dividends to common stockholders Net income added to retained earnings Beginning retained earning 11,000 6,800 17,800 5,200 22 100 85 4.350 taxes 1,740 2,610 2, 235 30,940 05 8543 interest expense Net income before taxes Income taxes Net income Dividends to common stockholders Net income added to retained earnings Beginning retained earnings Ending retained earnings 21, 250 8,509 12,750 200 12,550 33,175 $45,725 4,350 1,740 2,610 375 2,235 30,940 $33,175 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.) Times interest earned ratio Debt-to-equity ratio Equity multiplier 3
