Exercise 14-5 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 890,000 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 the year was $22. All of the company's sales are on account Meller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year $ 4,774 15,300 18,150 1,898 32,114 $ 5,550 10,20 8,560 2,256 26 590 6,900 20,100 27,020 $59,114 5,900 19,900 26,800 $53,390 Assets Current assets: 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 Notes payable, short ters 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 $10,400 7 390 11,50 5.8.750 1,150 390 18,290 10,000 21.520 10,00 20290 890 890 4,650 5,540 32.000 3.650 5,545 278560 33100 $53,390 359,114 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year Sales $88,000 583,000 Cost of goods sold 56,500 52,500 Gross margin 31,500 30,500 Selling and administrative expenses: Selling expenses 9,400 8,960 Administrative expenses 12,900 11,900 Total selling and administrative expenses 22,300 20,800 Net operating income 9, 200 9,700 Interest expense 1,200 1,200 Net income before taxes 8,990 3,500 Income taxes 3,200 3,400 Net income 4,800 5,100 Dividends to common stockholders 356 712 Net Income added to retained earnings 4,444 4,388 Beginning retained earnings 27,560 23, 172 Ending retained earnings $32,004 $27,560 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 as 12.3).) 2. Net profit margin percentage (Round your percentage answer to 1 decimal place (ie, 0.1234 should be entered as 12.3).) 3. Return on total assets (Round your percentage answer to 1 decimal place tl.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 % % % %