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 $21. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year $ 1,190 9,400 13,600 690 24,880 $ 1,340 8,300 11,400 630 21,670 11,000 42,586 53,586 $78,466 11,000 34,918 45,918 $67,588 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 $20,400 1,050 0 21,450 $17,700 730 170 18,600 9,200 30, 650 9,200 27,800 2,000 4,000 6,000 41,816 47,816 $78, 466 2,000 4,000 6,000 33,788 39, 788 $ 67,588 Last Year $ 65,000 42,000 23,000 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Sales $67,000 Cost of goods sold 35,000 Gross margin 32,000 Selling and administrative expenses: Selling expenses 10,600 Administrative expenses 6,700 Total selling and administrative expenses 17,300 Net operating income 14,700 Interest expense 920 Net income before taxes 13, 780 Income taxes 5,512 Net income 8,268 Dividends to common stockholders 240 Net income added to retained earnings 8,028 Beginning retained earnings 33, 788 Ending retained earnings $ 41,816 10,300 6,200 16,500 6,500 920 5,580 2,232 3,348 600 2,748 31,040 $ 33, 788 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. Times interest earned ratio 2. Debt-to-equity ratio Equity multiplier 3
