Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Comparative financial statements for Weller Corporation, a merchandising company, for the year ending December 3 1 appear below. The company did not issue any new

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 $27. All of the companys sales are on account.
Weller Corporation
Comparative Balance Sheet
(dollars in thousands)
This Year Last Year
Assets
Current assets:
Cash $ 1,220 $ 1,280
Accounts receivable, net 10,9006,700
Inventory 13,20011,000
Prepaid expenses 730660
Total current assets 26,05019,640
Property and equipment:
Land 9,5009,500
Buildings and equipment, net 43,78641,128
Total property and equipment 53,28650,628
Total assets $ 79,336 $ 70,268
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 20,000 $ 19,200
Accrued liabilities 990730
Notes payable, short term 0230
Total current liabilities 20,99020,160
Long-term liabilities:
Bonds payable 8,7008,700
Total liabilities 29,69028,860
Stockholders' equity:
Common stock 2,0002,000
Additional paid-in capital 4,0004,000
Total paid-in capital 6,0006,000
Retained earnings 43,64635,408
Total stockholders' equity 49,64641,408
Total liabilities and stockholders' equity $ 79,336 $ 70,268
Weller Corporation
Comparative Income Statement and Reconciliation
(dollars in thousands)
This Year Last Year
Sales $ 74,000 $ 65,000
Cost of goods sold 41,00038,000
Gross margin 33,00027,000
Selling and administrative expenses:
Selling expenses 11,10010,900
Administrative expenses 6,9006,700
Total selling and administrative expenses 18,00017,600
Net operating income 15,0009,400
Interest expense 870870
Net income before taxes 14,1308,530
Income taxes 5,6523,412
Net income 8,4785,118
Dividends to common stockholders 240450
Net income added to retained earnings 8,2384,668
Beginning retained earnings 35,40830,740
Ending retained earnings $ 43,646 $ 35,408
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.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cost Management Accounting And Control

Authors: Don R. Hansen, Maryanne Mowen

2nd Edition

0538864451, 978-0538864459

More Books

Students also viewed these Accounting questions

Question

Define indirect financial compensation (employee benefits).

Answered: 1 week ago