Question
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 990,000 shares of common stock were outstanding. The interest rate on the bond payable was 12%, 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 $28. All of the companys sales are on account.
Weller Corporation Comparative Balance Sheet (dollars in thousands) | ||
---|---|---|
This Year | Last Year | |
Assets | ||
Current assets: | ||
Cash | $ 5,834 | $ 6,650 |
Accounts receivable, net | 16,300 | 9,200 |
Inventory | 10,650 | 8,960 |
Prepaid expenses | 1,990 | 2,480 |
Total current assets | 34,774 | 27,290 |
Property and equipment: | ||
Land | 7,900 | 7,900 |
Buildings and equipment, net | 21,100 | 20,900 |
Total property and equipment | 29,000 | 28,800 |
Total assets | $ 63,774 | $ 56,090 |
Liabilities and Stockholders' Equity | ||
Current liabilities: | ||
Accounts payable | $ 11,400 | $ 9,250 |
Accrued liabilities | 980 | 1,650 |
Notes payable, short term | 490 | 490 |
Total current liabilities | 12,870 | 11,390 |
Long-term liabilities: | ||
Bonds payable | 10,000 | 10,000 |
Total liabilities | 22,870 | 21,390 |
Stockholders' equity: | ||
Common stock | 990 | 990 |
Additional paid-in capital | 5,150 | 5,150 |
Total paid-in capital | 6,140 | 6,140 |
Retained earnings | 34,764 | 28,560 |
Total stockholders' equity | 40,904 | 34,700 |
Total liabilities and stockholders' equity | $ 63,774 | $ 56,090 |
Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) | ||
---|---|---|
This Year | Last Year | |
Sales | $ 98,000 | $ 93,000 |
Cost of goods sold | 61,500 | 57,500 |
Gross margin | 36,500 | 35,500 |
Selling and administrative expenses: | ||
Selling expenses | 10,400 | 9,900 |
Administrative expenses | 13,900 | 12,900 |
Total selling and administrative expenses | 24,300 | 22,800 |
Net operating income | 12,200 | 12,700 |
Interest expense | 1,200 | 1,200 |
Net income before taxes | 11,000 | 11,500 |
Income taxes | 4,400 | 4,600 |
Net income | 6,600 | 6,900 |
Dividends to common stockholders | 396 | 792 |
Net income added to retained earnings | 6,204 | 6,108 |
Beginning retained earnings | 28,560 | 22,452 |
Ending retained earnings | $ 34,764 | $ 28,560 |
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
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started