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 960.000 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 $26. All of the company's sales are on account eller Corporation Comparative Balance sheet (dollars in thousands) This Year Last Year 020 $ 3.936 18,000 20, 500 1960 30,496 23 7600 7600 2000 28,400 358998 1112012 55 530 Assets Current assets: Cash Accounts receivable, het Inventory Prepaid expenses Total current assets Property and equipment: Land Buildings and equipment et Total property and equipment Total assets Liabilities and Stockholders Equity Current liabilities Accounts payable Accrued liabilities Notes payable, short term Total current libres Long term liabilities tonds payable Total liabilities stockholders equity Common stock Additional paid in capital Total paid in capital Retained earnings Tota stockholders equity Total Hitles and stockholders equity $11,100 920 160 12.480 S. 200 1,500 466 11.06 250 1872 6,250 1723101 960 5.000 5,960 34,206 10.100 $58,94 960 5.000 5,960 28,260 351,530 Last Year $99, ce 56.999 34, de Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands This Year Sales $95,000 Cost of goods sold 60.000 Gross margin 35.90 Selling and administrative expenses: Selling expenses 10,109 Administrative expenses 13.600 Total selling and administrative expenses 23700 Net operating income 21.30 Interest expense 758 Net incone before takes 10.550 Income taxes 4220 Net Income 33 Dividends to common stockholders Net Incone added to retained earnings $948 Beginning retained earnings 28260 Ending retained earnings $34,206 9 beg 12.680 22.200 11,800 750 11, 4,420 5.639 768 5.862 2298 $28260 Required: Compute the following financial data for this year 1. Gross margin percentage. (Round your percentage answer to 1 decimal ploce (1... 01234 should be entered as 12.3).) 2. Net profit margin percentage (Round your percentage onswer 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 (ie.. 0.1234 should be entered as 12.33 4 Return on equity (Round your percentage answer to 2 decimal places (ie, 0.1234 should be entered as 12.343) N Gross margin percentage 2. Net profit margin percentage 3. Return on total asseto 4 Return on equity
