Exercise 14-4 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 700,000 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 the year was $23. All of the company's sales are on account Weller Corporation Comparative Balance Sheet (dollars in thousands This Year Last Year $ 1,170 11,000 14.000 790 26,960 $ 1,310 7,000 12,600 1660 21.520 10.000 45, 102 55, 102 382,062 10,000 39.816 49,810 321,336 Assets Current assets! Cash Accounts receivable, net Inventory Prepaid expenses Total current assets Property and equipment Land Buildings and equipment, et Total property and equipment Total assets Liabilities and Stockholders Equity Current lisbilities Accounts payable Accrued liabilities Notes payable short ter Total current liabilities Long term abilities Bonds payable Total abilities Stockholders' equity Common stock Additional pald.in capital Total paid in capital Retained earnings Total stockholders' equity Total liabilities and stockholdersity $19.000 1.04 $10,000 720 100 1620 20,940 9400 30.40 9,400 MELOR 2000 4.000 6.000 2.000 4000 0.000 36,66 42156 571,36 51.222 $82,062 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year Sales $74,000 $64,000 Cost of goods sold 39,000 37,000 Gross margin 35,000 27,000 Selling and administrative expenses: Selling expenses 11,400 10,200 Administrative expenses 6,600 6,900 Total selling and administrative expenses 18,000 17,100 Net operating income 17,000 9,900 Interest expense 940 940 Net income before taxes 16,060 8,960 Income taxes 6,424 3,584 Net income 9,636 5,376 Dividends to common stockholders 280 350 Net income added to retained earnings 9,356 5,026 Beginning retained earnings 36,366 31,340 Ending retained earnings $45,722 $36,366 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 eamed ratio Debt-to-equity ratio Equity multiplier 3