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 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 the year was $30. All of the company's sales are on account Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year $ 1,250 $1,320 10.2007 .100 12,300 12.000 700 24.450 20.990 570 9,900 48,804 58,704 $83,154 9.900 43,542 53,442 $74,432 Assets Current assets: Cash Accounts receivable, net Inventory Prepaid expenses Total current assets Property and equipmenti Land Buildings and equipment, net Total property and equipment Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable Accrued liabilities Notes payable, short term Total current liabilities Long-term liabilities Bonds payable Total liabilities Stockholders' equity. Common stock Additional paid-in capital Total paid-in capital Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $19.600 1.010 $19,400 870 180 20.450 20,610 300 28.750 28.910 2.000 4.000 6.000 48,244 54,244 $83. 154 2.000 4.000 6,000 39.682 45,682 $76.432 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year Sales $74,000 $65,000 Cost of goods sold 41,000 32,000 Gross margin 33,000 33,000 Selling and administrative expenses: Selling expenses 10,600 10,700 Administrative expenses 6,900 6,900 Total selling and administrative expenses 17,500 17,600 Net operating income 15,500 15,400 Interest expense 830 830 Net income before taxes 14,670 14,570 Income taxes 5,868 5,828 Net income 8, 802 8,742 Dividends to common stockholders 240 300 Net income added to retained earnings 8,562 8, 442 39,682 31, 240 Beginning retained earnings Ending retained earnings $48, 244 $39,682 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. 3. Times interest earned ratio Debt-to-equity ratio Equity multiplier