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 980,000 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 $27. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands ) This Year Last Year $ 4,568 $ 5,440 16, 2009 , 150 10,600 8,920 1,980 2,460 33, 348 25,970 7,800 21,000 28,800 $62,148 7,800 20,800 28,600 $54,570 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 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 $11,300 960 480 12,740 $ 9,200 1,600 480 11,280 8,750 21,490 8,750 20,030 980 5,100 6,080 34,578 40,658 $62,148 980 5,100 6,080 28,460 34,540 $54,570 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 980,000 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 $27. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands ) This Year Last Year $ 4,568 $ 5,440 16, 2009 , 150 10,600 8,920 1,980 2,460 33, 348 25,970 7,800 21,000 28,800 $62,148 7,800 20,800 28,600 $54,570 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 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 $11,300 960 480 12,740 $ 9,200 1,600 480 11,280 8,750 21,490 8,750 20,030 980 5,100 6,080 34,578 40,658 $62,148 980 5,100 6,080 28,460 34,540 $54,570 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 (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).) Gross margin percentage 2. Net profit margin percentage Return on total assets Return on equity 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 980,000 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 $27. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands ) This Year Last Year $ 4,568 $ 5,440 16, 2009 , 150 10,600 8,920 1,980 2,460 33, 348 25,970 7,800 21,000 28,800 $62,148 7,800 20,800 28,600 $54,570 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 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 $11,300 960 480 12,740 $ 9,200 1,600 480 11,280 8,750 21,490 8,750 20,030 980 5,100 6,080 34,578 40,658 $62,148 980 5,100 6,080 28,460 34,540 $54,570 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 980,000 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 $27. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands ) This Year Last Year $ 4,568 $ 5,440 16, 2009 , 150 10,600 8,920 1,980 2,460 33, 348 25,970 7,800 21,000 28,800 $62,148 7,800 20,800 28,600 $54,570 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 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 $11,300 960 480 12,740 $ 9,200 1,600 480 11,280 8,750 21,490 8,750 20,030 980 5,100 6,080 34,578 40,658 $62,148 980 5,100 6,080 28,460 34,540 $54,570 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 (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).) Gross margin percentage 2. Net profit margin percentage Return on total assets Return on equity