Exercise 14-5 (Algo) Financial Ratios for Assessing Profitability (1.014-5) 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 820,000 shares of common stock were outstanding. The interest rate on the bond payable was 12%, 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 $19. All of the company's sales are on account Heller Corporation Comparative Balance Sheet (dollors in thousands) This Year Last Year 5 3,812 12,500 9.800 1.820 27,932 $ 3,980 9.200 8,280 2.140 23.600 6,200 19,400 25,600 $ 53,532 6.200 19,200 25,400 $ 49,000 Assets Current asseto Cash Accounts receivable.net Inventory Prepaid expenses Total current assets Property and equipment Land Buildings and equipment, net Total property and equipment Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable Accrued liabilities Totes payable, short term Total current abilities 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 oquity 59,700 5.8.400 649 800 320 10,660 320 9,520 7.500 18.160 7,500 17,020 820 4.300 5,120 30252 352322 5.53,532 320 4.300 5.120 26.069 31,900 $ 49,000 Last Year $ 76,000 49,000 27,000 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Salon $ 81,000 Cost of goods sold 53,000 Gross margin 28,000 Selling and administrative expenses Selling expenses 8,700 Administrative expenses 12,200 Total selling and administrative expenses 20,900 Net operating income 7,100 Interest expense 900 Net income before taxes 6,200 Income taxe 2,480 Net incomo 3, 720 Dividends to common stockholders 328 Net Income added to retained earningo 1,392 Beginning retained earnings 26,860 Ending retained earnings $ 30,252 8,200 11,200 19,400 7,600 900 6,700 2,680 4,020 656 3,364 23,496 $ 26,860 Required: Compute the following financial data for this year. 1. Gross margin percentage. (Round your percentage answer to 1 decimal place (l.e., 0.1234 should be entered as 12.3).) 2. Net profit margin percentage (Round your percentage answer to 1 decimal place (.e. 0.1234 should be entered as 12.3).) 3. Return on total assets. (Round your percentage answer to 1 decimal place (l.e., 0.1234 should be entered as 12.3).) 4. Return on equity. (Round your percentage answer to 2 decimal places (i.e., 0.1234 should be entered as 12.34).) 1. Gross margin percentage 2. Net profit margin percentage 3. Return on total assets 4. Return on equity % % % %
