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 600,000 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 companys common stock at the end of this year was $27. All of the companys sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year Assets Current assets: Cash $ 1,250 $ 1,230 Accounts receivable, net 9,900 7,700 Inventory 13,500 12,400 Prepaid expenses 600 680 Total current assets 25,250 22,010 Property and equipment: Land 9,100 9,100 Buildings and equipment, net 47,722 40,756 Total property and equipment 56,822 49,856 Total assets $ 82,072 $ 71,866 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 19,600 $ 19,200 Accrued liabilities 960 850 Notes payable, short term 0 240 Total current liabilities 20,560 20,290 Long-term liabilities: Bonds payable 8,400 8,400 Total liabilities 28,960 28,690 Stockholders' equity: Common stock 2,000 2,000 Additional paid-in capital 4,000 4,000 Total paid-in capital 6,000 6,000 Retained earnings 47,112 37,176 Total stockholders' equity 53,112 43,176 Total liabilities and stockholders' equity $ 82,072 $ 71,866 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year Sales $ 76,000 $ 66,000 Cost of goods sold 40,000 38,000 Gross margin 36,000 28,000 Selling and administrative expenses: Selling expenses 11,300 10,700 Administrative expenses 6,900 6,400 Total selling and administrative expenses 18,200 17,100 Net operating income 17,800 10,900 Interest expense 840 840 Net income before taxes 16,960 10,060 Income taxes 6,784 4,024 Net income 10,176 6,036 Dividends to common stockholders 240 300 Net income added to retained earnings 9,936 5,736 Beginning retained earnings 37,176 31,440 Ending retained earnings $ 47,112 $ 37,176 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.)