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 $21. All of the companys sales are on account.

Weller Corporation

Comparative Balance Sheet

(dollars in thousands)

This Year Last Year

Assets

Current assets:

Cash $ 1,090 $ 1,360

Accounts receivable, net 9,100 8,200

Inventory 13,000 12,400

Prepaid expenses 700 570

Total current assets 23,890 22,530

Property and equipment:

Land 10,400 10,400

Buildings and equipment, net 50,834 37,642

Total property and equipment 61,234 48,042

Total assets $ 85,124 $ 70,572

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable $ 18,900 $ 17,500

Accrued liabilities 950 880

Notes payable, short term 0 130

Total current liabilities 19,850 18,510

Long-term liabilities:

Bonds payable 8,800 8,800

Total liabilities 28,650 27,310

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 50,474 37,262

Total stockholders' equity 56,474 43,262

Total liabilities and stockholders' equity $ 85,124 $ 70,572

Weller Corporation

Comparative Income Statement and Reconciliation

(dollars in thousands)

This Year Last Year

Sales $ 76,000 $ 64,000

Cost of goods sold 35,000 35,000

Gross margin 41,000 29,000

Selling and administrative expenses:

Selling expenses 10,700 10,000

Administrative expenses 7,000 6,500

Total selling and administrative expenses 17,700 16,500

Net operating income 23,300 12,500

Interest expense 880 880

Net income before taxes 22,420 11,620

Income taxes 8,968 4,648

Net income 13,452 6,972

Dividends to common stockholders 240 450

Net income added to retained earnings 13,212 6,522

Beginning retained earnings 37,262 30,740

Ending retained earnings $ 50,474 $ 37,262

Required:

Compute the following financial ratios for this year:

1. Times interest earned ratio.

2. Debt-to-equity ratio.

3. Equity multiplier.