Exercise 16-4 (Algo) Financial Ratios for Debt Management [LO16-4] 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 500,000 shares of common stock were outstanding. The interest rate on the bond payable was 10%, 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 this year was $29. All of the company's sales are on account. are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) 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: This Year Last Year $ 1,140 10,500 $1,310 7,700 12,900 11,900 780 520 25,320 21,430 9,100 9,100 43,402 38,856 52,502 47,956 $ 77,822 $ 69,386 $ 19,400 $ 17,900 1,080 740 0 200 20,480 18,840 9,400 9,400 29,880 28,240 2,000 2,000 4,000 4,000 6,000 6,000 Retained earnings 41,942 35,146 Total stockholders' equity 47,942 41,146 Total liabilities and stockholders' equity $ 77,822 $ 69,386 Common stock Additional paid-in capital Total paid-in capital Weller Corporation. Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year Sales $ 73,000 $ 64,000 Cost of goods sold 42,000 39,000 Gross margin 31,000 25,000 Selling and administrative expenses: Selling expenses 11,100 10,300. Administrative expenses 7,300 7,000 Total selling and administrative expenses 18,400 17,300 Net operating income 12,600 7,700 Interest expense 940 940 Net income before taxes 11,660 6,760 Income taxes 4,664 2,704 Net income 6,996 4,056 Dividends to common stockholders 200 250 Net income added to retained earnings Beginning retained earnings Ending retained earnings 6,796 35,146 3,806 31,340 $ 41,942 $ 35,146 Required: Compute the following financial ratios for this year: 1. Times interest earned ratio. 2. Debt-to-equity ratio. 3. Equity multiplier. (For all requirements, round your answers to 2 decimal places.) 1. Times interest earned ratio 2. Debt-to-equity ratio 3. Equity multiplier