Exercise 15-4

Comparative Financial Statements for Walker Corporation, a merchandising company, for the fiscal year ending December 31 appear below. The company did not issue any new common stock during the year: A total of $800,000 shares of common stock were outstanding. The interest rate on the bond payable was 12%, the income tax rate was 40% and the divided per share of common stock was $0.40. The market value of the company's company's common stock at the end of the year was $18.00. 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- $1,280 $1,560

Accounts Receivable, Net- $12,3000 $9,100

Inventory $9,700 $8,200

Prepaid Expenses $1,800 $2,100

Total Current Assets $25,080 $20,960

Property and Equipment

Land- $6,000 $6,000

Buildings and Equipment, net- $19,200 $19,000

Total Property and Equipment- $25,200 $25,000

Total Assets- $50,280 $45,960

Liabilities and Stockholder's Equity

Current Liabilities:

Accounts Payable- $9,500 $8,300

Accrued Liabilities- $600 $700

Notes Payable, short term $300 $300

Total Current Liabilities $10,400 $9,300

Long- term Liabilities

Bonds Payable- $5,000 $5,000

Total Liabilities- $15,400 $14,300

Stockholders Equity

Common Stock- $800 $800

Additional paid- in capital- $4,200 $4,200

Total Paid- in capital- $5,000 $5,000

Retained Earnings- $29,880 $26,660

Total Stockholders'- $34,880 $431,660

Total Liabilities and Stockholders Equity- $50,280 $45,960

Weller Corporation

Comparative Income Statement and Reconciliation

(Dollars in thousands)

This Year Last Year

Sales: $79,000 $74,000

COGS: $52,000 $48,000

Gross Margin: $27,000 $27,000

Selling and Administrative Expenses:

Selling Expenses: $8,500 $8,000

Administrative Expenses $12,000 $11,000

Total Selling and Administrative Expenses: $20,400 $19,000

Net Operating Income: $6,500 $7,000

Interest Expense: $600 $600

Net Income Before Taxes: $5,900 $6,000

Income Taxes: $2,360 $2,560

Net Income: $3,540 $3,840

Dividends to Common Stockholders: $320 $320

Net Income Added to Retained Earnings: $3,220 $3,240

Beginning Retained Earnings $26,660 $23,420

Ending Retained Earnings: $29,880 $26,660

A) Compute the following financial ratios for this year:

1. Times interest earned ratio
2. Debt- to- Ratio
3. Equity Multiplier

B) Compute the following financial data for this year:

1. Gross Margin Percentage
2. Net Profit Margin Percentage.
3. Return of total Assets.
4. Return on Equity.

C) Compute the following financial data for this year:

1. Earnings per Share
2. Price- Earnings Ratio
3. Dividend Payout Ratio
4. Dividend Yield Ratio
5. Book Value per Share