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 31 appear below. The company did not issue any new common

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 840,000 shares of common stock were outstanding. The interest rate on the bonds, which were sold at their face value, was 12%. The income tax rate was 40% and the dividend per share of common stock was $0.40 this year. The market value of the companys common stock at the end of the year was $20. All of the companys sales are on account.

Weller Corporation Comparative Balance Sheet (dollars in thousands)
This Year Last Year
Assets
Current assets:
Cash $ 6,344 $ 6,400
Accounts receivable, net 12,700 9,300
Inventory 9,900 8,360
Prepaid expenses 1,840 2,180
Total current assets 30,784 26,240
Property and equipment:
Land 6,400 6,400
Buildings and equipment, net 19,600 19,400
Total property and equipment 26,000 25,800
Total assets $ 56,784 $ 52,040
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 9,900 $ 8,500
Accrued liabilities 680 900
Notes payable, short term 340 340
Total current liabilities 10,920 9,740
Long-term liabilities:
Bonds payable 10,000 10,000
Total liabilities 20,920 19,740
Stockholders' equity:
Common stock 840 840
Additional paid-in capital 4,400 4,400
Total paid-in capital 5,240 5,240
Retained earnings 30,624 27,060
Total stockholders' equity 35,864 32,300
Total liabilities and stockholders' equity $ 56,784 $ 52,040

Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands)
This Year Last Year
Sales $ 83,000 $ 78,000
Cost of goods sold 54,000 50,000
Gross margin 29,000 28,000
Selling and administrative expenses:
Selling expenses 8,900 8,400
Administrative expenses 12,400 11,400
Total selling and administrative expenses 21,300 19,800
Net operating income 7,700 8,200
Interest expense 1,200 1,200
Net income before taxes 6,500 7,000
Income taxes 2,600 2,800
Net income 3,900 4,200
Dividends to common stockholders 336 630
Net income added to retained earnings 3,564 3,570
Beginning retained earnings 27,060 23,490
Ending retained earnings $ 30,624 $ 27,060

Required:
Compute the following financial data for this year:

1.

Gross margin percentage. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)

2.

Net profit margin percentage. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)

3.

Return on total assets. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)

4.

Return on equity. (Round your percentage answer to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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

Students also viewed these Accounting questions

Question

Q1. what factors determine the risk premium of an investment?

Answered: 1 week ago

Question

CL I P COL Astro- L(1-cas0) Lsing *A=2 L sin(0/2)

Answered: 1 week ago