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 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 the year was $18. All of the company's sales are on account eller Corporation Comparative Balance Sheet (dollar in thousands This Yeart Year $ 2,546 12,400 9.750 3 2,770 9.159 3.240 2,120 22,200 1.810 26,506 Assets Current als Cash Accounts receivable, not Inventory Prepaid expenses Total current Auto Property and equipment Land Buildings and equipment, net Total property and equipment Total Ante Liabilities and Stockholders' Equity Current Tibilities Accounts payable Nord labilities Notes payable, whort term Total current liabilities Long-term liabilities 6.100 19,300 25,400 $51.906 6,100 19.100 25 200 547.40 59.600 630 310 10530 $350 150 310 9.410 > y, bu 620 310 10,530 $ 8,50 750 310 9,410 6,250 16,780 6,250 15,660 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 810 4,250 5,060 30,066 35, 126 $51,906 810 4,250 5,060 26,760 31,820 $47, 480 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year Sales $80,000 $75,000 Cost of goods sold 52,500 48,500 Gross margin 27,500 26,500 Selling and administrative expenses: Selling expenses 8,600 8,100 Administrative expenses 12,100 11,100 Total selling and administrative expenses 20,700 19,200 Net operating income 6,800 7,300 Interest expense 750 750 Net income before taxes 6,050 6,550 Income taxes 2,420 2,620 Net income 3,630 3,930 Dividends to common stockholders 324 648 Net income added to retained earnings 3,306 3,282 Beginning retained earnings 26,760 23,478 Selling and administrative expenses! Selling expenses Administrative expenses Total selling and administrative expenses Net operating income Interest expenne Net income before taxes Income taxes Net income Dividends to common stockholders Net income added to retained earnings Beginning retained earninga Ending retained earnings 8,600 12,100 20,700 6,800 750 6,050 2,420 3,630 324 3,306 26,760 $30,066 B,100 11.100 19,200 7,300 750 6,550 2,620 3,930 648 3,282 23,478 $26,760 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 (I.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 (.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 % %