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 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 companys common stock at the end of the year was $26. All of the companys sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year Assets Current assets: Cash $ 1,240 $ 1,390 Accounts receivable, net 10,800 7,100 Inventory 12,200 11,500 Prepaid expenses 780 670 Total current assets 25,020 20,660 Property and equipment: Land 10,300 10,300 Buildings and equipment, net 41,097 37,481 Total property and equipment 51,397 47,781 Total assets $ 76,417 $ 68,441 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 19,700 $ 18,900 Accrued liabilities 1,040 850 Notes payable, short term 0 110 Total current liabilities 20,740 19,860 Long-term liabilities: Bonds payable 8,400 8,400 Total liabilities 29,140 28,260 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 41,277 34,181 Total stockholders' equity 47,277 40,181 Total liabilities and stockholders' equity $ 76,417 $ 68,441 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year Sales $ 71,000 $ 64,000 Cost of goods sold 40,000 40,000 Gross margin 31,000 24,000 Selling and administrative expenses: Selling expenses 11,100 10,700 Administrative expenses 6,900 6,100 Total selling and administrative expenses 18,000 16,800 Net operating income 13,000 7,200 Interest expense 840 840 Net income before taxes 12,160 6,360 Income taxes 4,864 2,544 Net income 7,296 3,816 Dividends to common stockholders 200 375 Net income added to retained earnings 7,096 3,441 Beginning retained earnings 34,181 30,740 Ending retained earnings $ 41,277 $ 34,181 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