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 700,000 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 $20. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year $ 1,190 10,400 13,200 800 25,590 $ 1,360 8,300 12,400 650 22,710 10,200 48,612 58,812 $84,402 10,200 40,506 50,706 $73,416 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: 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 $19,600 1,030 $19,200 780 220 20,200 20,630 8,400 29,030 8,400 28,600 2,000 2,000 4,000 6,000 49,372 55,372 $84,402 4,000 6,000 38,816 44,816 $73,416 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year Sales $74,000 $65,000 Cost of goods sold 38,000 34,000 Gross margin 36,000 31,000 Selling and administrative expenses: Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 49,372 55,372 $84,402 38,816 44,816 $73,416 Last Year $65,000 34,000 31,000 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Sales $74,000 Cost of goods sold 38,000 Gross margin 36,000 Selling and administrative expenses: Selling expenses 10,500 Administrative expenses 6,600 Total selling and administrative expenses 17, 109 Net operating income 18,900 Interest expense 840 Net income before taxes 18,060 Income taxes 7,224 Net income 10,836 Dividends to common stockholders 280 Net income added to retained earnings 10,556 Beginning retained earnings 38,816 Ending retained earnings $49,372 10,100 6,600 16,700 14,300 840 13,460 5,384 8,076 700 7,376 31,440 $38,816 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. 3. Times interest earned ratio Debt-to-equity ratio Equity multiplier
