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Comparative financial statements for Weller Corporation, a merchandising company, for the fiscal year ending December 31 appear below. The company did not issue any new
Comparative financial statements for Weller Corporation, a merchandising company, for the fiscal 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 $1.25 last year and $0.90 this year. The market value of the companys common stock at the end of the year was $29. All of the companys sales are on account. |
Weller Corporation Comparative Balance Sheet (dollars in thousands) | ||||||
This Year | Last Year | |||||
Assets | ||||||
Current assets: | ||||||
Cash | $ | 1,200 | $ | 1,280 | ||
Accounts receivable, net | 9,100 | 7,100 | ||||
Inventory | 13,400 | 12,000 | ||||
Prepaid expenses | 790 | 650 | ||||
Total current assets | 24,490 | 21,030 | ||||
Property and equipment: | ||||||
Land | 11,000 | 11,000 | ||||
Buildings and equipment, net | 40,112 | 38,616 | ||||
Total property and equipment | 51,112 | 49,616 | ||||
Total assets | $ | 75,602 | $ | 70,646 | ||
Liabilities and Stockholders' Equity | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 19,700 | $ | 19,300 | ||
Accrued liabilities | 980 | 870 | ||||
Notes payable, short term | 0 | 270 | ||||
Total current liabilities | 20,680 | 20,440 | ||||
Long-term liabilities: | ||||||
Bonds payable | 9,400 | 9,400 | ||||
Total liabilities | 30,080 | 29,840 | ||||
Stockholders' equity: | ||||||
Common stock | 2,000 | 2,000 | ||||
Additional paid-in capital | 4,000 | 4,000 | ||||
Total paid-in capital | 6,000 | 6,000 | ||||
Retained earnings | 39,522 | 34,806 | ||||
Total stockholders' equity | 45,522 | 40,806 | ||||
Total liabilities and stockholders' equity | $ | 75,602 | $ | 70,646 | ||
Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) | ||||||
This Year | Last Year | |||||
Sales | $ | 67,000 | $ | 65,000 | ||
Cost of goods sold | 40,000 | 40,000 | ||||
Gross margin | 27,000 | 25,000 | ||||
Selling and administrative expenses: | ||||||
Selling expenses | 10,800 | 10,100 | ||||
Administrative expenses | 6,500 | 6,100 | ||||
Total selling and administrative expenses | 17,300 | 16,200 | ||||
Net operating income | 9,700 | 8,800 | ||||
Interest expense | 940 | 940 | ||||
Net income before taxes | 8,760 | 7,860 | ||||
Income taxes | 3,504 | 3,144 | ||||
Net income | 5,256 | 4,716 | ||||
Dividends to common stockholders | 540 | 750 | ||||
Net income added to retained earnings | 4,716 | 3,966 | ||||
Beginning retained earnings | 34,806 | 30,840 | ||||
Ending retained earnings | $ | 39,522 | $ | 34,806 | ||
Required: | |
Compute the following financial ratios for this year: |
1. | Times interest earned ratio. (Round your answer to 1 decimal place.) |
2. | Debt-to-equity ratio. (Round your answer to 2 decimal places.) |
3. | Equity multiplier. (Round your answer to 2 decimal places.) |
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