Exercise 14-4 (Algo) Financial Ratios for Debt Management [LO14-4] 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 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 $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 $25. All of the company's sales are on account. Assets Current assets: Cash Weller Corporation Comparative Balance Sheet (dollars in thousands) Accounts receivable, net Inventory Prepaid expenses This YearLast Year $ 1,250 1,270 10,800 7,400 13,100 10,900 650 560 Total current assets 25,800 20,130 Property and equipment: Land 10,200 10,200 Buildings and equipment, net 48,534 41,252 Total property and equipment 58,734 51,452 $ Total assets 84,534 71,582 Liabilities and Stockholders' Equity Current liabilities: $ Accounts payable 19,700 17,400 Accrued liabilities 910 720 140 20,610 18,260 Notes payable, short term Total current liabilities Long-term liabilities: Bonds payable Total liabilities Stockholders' equity: Common stock Additional paid-in capital Retained earnings 9,300 9,300 29,910 27,560 2,000 2,000 4,000 4,000 Total paid-in capital 6,000 6,000 48,624 38,022 Total stockholders' equity 54,624 44,022 $ $ Total liabilities and stockholders' equity 84,534 71,582 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) Sales Cost of goods sold Gross margin Selling and administrative expenses: Selling expenses Administrative expenses Total selling and administrative expenses Net operating income Interest expense Net income before taxes Income taxes Net income Dividends to common stockholders Net income added to retained earnings. Beginning retained earnings Ending retained earnings This Year $ 72,000 Last Year $ 65,000 35,000 34,000 37,000 31,000 10,700 10,400 7,300 6,700 18,000 17,100 19,000 13,900 930 930 18,070 12,970 7,228 5,188 10,842 7,782 240 600 10,602 38,022 $ 48,624 7,182 30,840 $ 38,022 Required: Compute the following financial ratios for this year: 1 Times interest eamed ratio. 2. Debt-to-equity ratio. 3. Equity multiplier (For all requirements, round your answers to 2 decimal places.) 1. Times interest eamed ratio 2. Debt-to-equity ratio 3. Equity mutiplier