Exercise 14-6 Financial Ratios for Assessing Market Performance (LO14-6) 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 880,000 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 $22.00. All of the company's sales are on account Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year Assets Current assets Cash $ 3,500 $ 4,340 Accounts receivable, net 15,200 12,150 Inventory 10,100 8,520 Prepaid expenses 1.850 2,260 Total current assets 30.686 25, 270 Property and equipment Land 6,800 6,800 Buildings and equipment, net 20,000 19.800 Total property and equipment 26 300 20.600 Total assets $57,480 551,070 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $10,300 $ 8,700 Accrued liabilities 760 1.100 Notes payable, short tern 100 950 Total current liabilities 11.440 10,130 Long term liabilities: Bonds payable 8.750 3,750 Total abilities 20.390 10.930 Stockholdersequity Common stock BO 800 Additional paid in capital 4.600 4,600 Total paid in capital 5,480 5,400 Retained earnings 31,310 27,460 Total stockholders' equity 17,20 32.940 Total 1obilities and stockholders' equity $57,458 $51,670 Last Year $82,000 52,000 30,000 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Sales $87,000 Cost of goods sold 56,000 Gross margin 31,000 Selling and administrative expenses: Selling expenses 9,300 Administrative expenses 12,800 Total selling and administrative expenses 22,100 Net operating income 8,900 Interest expense 1,050 Net income before taxes 7,850 Income taxes 3,140 Net income 4,710 Dividends to common stockholders 352 Net income added to retained earnings 4,358 Beginning retained earnings 27,460 Ending retained earnings $31,818 8,800 11,800 20,600 9,400 1,050 8,350 3,340 5,010 704 4, 306 23,154 $27,460 Required: Compute the following financial data for this year 1. Earnings per share. (Round your answer to 2 decimal places.) 2. Price-earnings ratio. (Round your intermediate calculations and final answer to 2 decimal places.) 3. Dividend payout ratio. (Round your intermediate calculations and final answer to 2 decimal places.) 4. Dividend yield ratio. (Round your answer to 2 decimal places.) 5. Book value per share. (Round your answer to 2 decimal places.) 1. Earnings per share 2. Price-earnings ratio 3. Dividend payout ratio 4 Dividend yield ratio 5. Book value per share %
