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 the year was $27. All of the company's sales are on account Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year $ 1,210 10,100 12,500 740 24,550 $ 1,400 8,000 11,900 570 21,870 10, 100 44,990 55,090 $79,640 10,100 39,810 49,910 $71,780 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 $18,700 1,020 $19,200 880 110 20, 190 19, 720 9,500 29, 220 9,500 29,690 2,000 4,000 6,000 44, 420 50, 420 $79,640 2,000 4,000 6,000 36,090 42,090 $71,780 Total liabilities and stockholders' equity $79, 640 $71, 780 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year Sales $73,000 $64,000 Cost of goods sold 40,000 36,000 Gross margin 33,000 28,000 Selling and administrative expenses: Selling expenses 11,100 10,900 Administrative expenses 6,600 6,400 Total selling and administrative expenses 17,700 17,300 Net operating income 15, 300 10,700 Interest expense 950 950 Net income before taxes 14,350 9,750 Income taxes 5,740 3,900 Net income 8,610 5,850 Dividends to common stockholders 280 700 Net income added to retained earnings 8,330 5,150 Beginning retained earnings 36,090 30,940 Ending retained earnings $44, 420 $36,090 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. Times interest earned ratio Debt-to-equity ratio Equity multiplier 3
