Exercise 14-5 (Algo) Financial Ratios for Assessing Profitability [LO14-5] 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 810,000 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 $18. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) Assets Current assets: This Year Last Year $ Cash Accounts receivable, net Inventory Prepaid expenses Total current assets $ 2,546 2,770 12,400 9,150 9,750 8,240 1,810 2,120 26,506 22,280 Property and equipment: Land 6,100 6,100 Buildings and equipment, net 19,300 19,100 Total property and equipment 25,400 25,200 Total assets $ $ 51,906 47,480 Liabilities and Stockholders' Equity Current liabilities: Accounts payable Accrued liabilities Total current liabilities Notes payable, short term. Long-term liabilities: Bonds payable Total liabilities Stockholders' equity: Common stock $ $ 9,600 8,350 620 750 310 310 10,530 9,410 6,250 6,250 16,780 15,660 810 810 Additional paid-in capital 4,250 4,250 Total paid-in capital 5,060 5,060 Retained earnings 30,066 26,760 Total stockholders' equity 35,126 31,820 $ $ Total liabilities and stockholders' equity 51,906 47,480 Sales Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year $ 80,000 Last Year $75,000 Sales Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) 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 Required: Compute the following financial data for this year. This Year $ 80,000 Last Year $ 75,000 52,500 48,500 27,500 26,500 8,600 8,100 12,100 11,100 20,700 19,200 6,800 7,300 750 750 6,050 6,550 2,420 2,620 3,630 3,930 324 648 3,306 26,760 3,282 23,478 $ 30,066 $ 26,760 1. Gross margin percentage. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) 2. Net profit margin percentage. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) 3. Return on total assets. (Round your percentage answer to 1 decimal place (i.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 % % % %