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 $30. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year $ 1,130 9,600 13,700 620 25,050 $ 1,270 6,800 12,100 590 20,760 10,300 42,914 53,214 $78,264 10,300 41,412 51,712 $ 72,472 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 $ 20,200 1,030 0 21,230 $18, 100 840 180 19, 120 9,300 30,530 9,300 28, 420 2,000 4,000 6,000 41,734 47,734 $78, 264 2,000 4,000 6,000 38,052 44,052 $72, 472 Last Year $ 65,000 35,000 30,000 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Sales $68,000 Cost of goods sold 43,000 Gross margin 25,000 Selling and administrative expenses: Selling expenses 10,600 Administrative expenses 7,000 Total selling and administrative expenses 17,600 Net operating income 7,400 Interest expense 930 Net income before taxes 6, 470 Income taxes 2,588 Net income 3,882 Dividends to common stockholders 200 Net income added to retained earnings 3,682 Beginning retained earnings 38,052 Ending retained earnings $41,734 10,700 6,100 16,800 13, 200 930 12,270 4,908 7,362 250 7,112 30,940 $38,052 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
