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 880,000 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 $22.00. All of the companys sales are on account.
Weller Corporation Comparative Balance Sheet (dollars in thousands) | ||||||
This Year | Last Year | |||||
Assets | ||||||
Current assets: | ||||||
Cash | $ | 3,508 | $ | 4,340 | ||
Accounts receivable, net | 15,200 | 10,150 | ||||
Inventory | 10,100 | 8,520 | ||||
Prepaid expenses | 1,880 | 2,260 | ||||
Total current assets | 30,688 | 25,270 | ||||
Property and equipment: | ||||||
Land | 6,800 | 6,800 | ||||
Buildings and equipment, net | 20,000 | 19,800 | ||||
Total property and equipment | 26,800 | 26,600 | ||||
Total assets | $ | 57,488 | $ | 51,870 | ||
Liabilities and Stockholders' Equity | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 10,300 | $ | 8,700 | ||
Accrued liabilities | 760 | 1,100 | ||||
Notes payable, short term | 380 | 380 | ||||
Total current liabilities | 11,440 | 10,180 | ||||
Long-term liabilities: | ||||||
Bonds payable | 8,750 | 8,750 | ||||
Total liabilities | 20,190 | 18,930 | ||||
Stockholders' equity: | ||||||
Common stock | 880 | 880 | ||||
Additional paid-in capital | 4,600 | 4,600 | ||||
Total paid-in capital | 5,480 | 5,480 | ||||
Retained earnings | 31,818 | 27,460 | ||||
Total stockholders' equity | 37,298 | 32,940 | ||||
Total liabilities and stockholders' equity | $ | 57,488 | $ | 51,870 | ||
Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) | ||||||
This Year | Last Year | |||||
Sales | $ | 87,000 | $ | 82,000 | ||
Cost of goods sold | 56,000 | 52,000 | ||||
Gross margin | 31,000 | 30,000 | ||||
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Selling and administrative expenses: | ||||||
Selling expenses | 9,300 | 8,800 | ||||
Administrative expenses | 12,800 | 11,800 | ||||
Total selling and administrative expenses | 22,100 | 20,600 | ||||
Net operating income | 8,900 | 9,400 | ||||
Interest expense | 1,050 | 1,050 | ||||
Net income before taxes | 7,850 | 8,350 | ||||
Income taxes | 3,140 | 3,340 | ||||
Net income | 4,710 | 5,010 | ||||
Dividends to common stockholders | 352 | 660 | ||||
Net income added to retained earnings | 4,358 | 4,350 | ||||
Beginning retained earnings | 27,460 | 23,110 | ||||
Ending retained earnings | $ | 31,818 | $ | 27,460 | ||
Required: |
Compute the following financial data for this year: |
1. | Earnings per share.
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