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 990,000 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 $075 last year and $040 this year. The market value of the company's common stock at the end of this ylar was $28. All of the company's soles are on account Comparative basance sneet (dollars in thousands) This Year Last Year Assets Current assets: Cash Accounts receivable, net Inventory Prepaid expenses Total current assets \begin{tabular}{rr} $5,834 & $6,650 \\ 16,300 & 9,200 \\ 10,650 & 8,960 \\ 1,990 & 2,480 \\ \hline 34,774 & 27,290 \\ \hline \end{tabular} Property and equipment: Land Buildings and equipment, net Total property and equipment Total assets Liabilities and Stockholders' Equity \begin{tabular}{rr} 7,900 & 7,900 \\ 21,100 & 20,900 \\ \hline 29,000 & 28,800 \\ \hline$63,774 & $56,090 \\ \hline \hline \end{tabular} Current liabilities: Accounts payable Accrued liabilities Notes payable, short term Total current liabilities \begin{tabular}{rr} $11,400 & $9,250 \\ 980 & 1,650 \\ 490 & 490 \\ \hline 12,870 & 11,390 \end{tabular} Long-term liabilities: Bonds payable Total 1iabilities Stockholdens' equity: Common stoek Additional paid-in capital Total paid-in capital Retained carnings Total stockholders' equity Total liabilities and stockholders" equity Weller corporation Comparative Income Statement and Reconciliation (dollars in thousands) Sales 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: 1. Gross margin percentage. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered os 12.3).) 2. Net profit margin percentage. (Round your percentage answer to 1 decimal ploce (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 ploces (i.e., 0.1234 should be entered as 12.34 ).)
