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 $24. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year Assets Current assets: Cash $ 1,100 $ 1,390 Accounts receivable, net 9,000 7,500 Inventory 13,100 12,500 Prepaid expenses 600 690 Total current assets 23,800 22,080 Property and equipment: Land 9,200 9,200 Buildings and equipment, net 46,434 41,932 Total property and equipment 55,634 51, 132 Total assets $73,212 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $18,500 $18,500 Accrued liabilities 950 830 Notes payable, short term 100 Total current liabilities 19,450 19, 430 Long-term liabilities: Bonds payable 8,300 8,300 Total liabilities 27,750 27,730 Stockholders' equity: $79,434 0 This Year Last Year $ 1,100 9,000 13,100 600 23,800 $ 1,390 7,500 12,500 690 22,080 Weller Corporation Comparative Balance Sheet (dollars in thousands) 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 9,200 46,434 55,634 $79,434 9, 200 41,932 51, 132 $73,212 $18,500 950 $18,500 830 100 19,430 19,450 31,300 27,750 8,300 27, 730 2,000 4,000 6,000 45,684 51,684 $79,434 2,000 4,000 6,000 39,482 45,482 $73,212 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year Sales $67,000 $65,000 Cost of goods sold 37,000 33,000 Gross margin 30,000 32,000 Selling and administrative expenses: Selling expenses 11,500 10,200 Administrative expenses 7,000 6,900 Total selling and administrative expenses 18,500 17,100 Net operating income 11,500 14,900 Interest expense 830 830 Net income before taxes 10,670 14,070 Income taxes 4,268 5,628 Net income 6,402 8,442 Dividends to common stockholders 200 500 Net income added to retained earnings 6,202 7,942 Beginning retained earnings 39,482 31,540 Ending retained earnings $45,684 $39,482 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.)
