Exercise 16-5 (Algo) Financial Ratios for Assessing Profitability (L016-5) 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 820,000 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 this year was $19. All of the company's sales are on account Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year $ 3,812 12,500 9,800 1,820 27,932 $ 3,980 9,200 8,280 2,140 23,600 6,200 19,400 25,600 $53,532 6,200 19,200 25,400 $49,000 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: Common stock Additional paid-in capital Total paid-in capital Retained earnings Total stockholders equity Total liabilities and stockholders' equity $ 9,700 640 320 10,660 $ 8,400 800 320 9,520 7,500 18,160 7,500 17,020 820 4,300 5,120 30, 252 35,372 $53,532 820 4,300 5,120 26,860 31,980 $49,000 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year Sales $81,000 $76,000 Cost of goods sold 53,000 49,000 Gross margin 28,000 27,000 Selling and administrative expenses : Selling expenses 8,700 8,200 Administrative expenses 12,200 11,200 Total selling and administrative expenses 20,900 19,400 Net operating income 7,100 7,600 Interest expense 900 900 Net income before taxes 6,200 6,700 Income taxes 2,480 2,680 Net income 3,720 4,020 Dividends to common stockholders 328 Net income added to retained earnings 3,392 3,364 Beginning retained earnings 26,860 23,496 Ending retained earnings $30,252 $26,860 656 Required: Compute the following financial data for this year, 1. Gross margin percentage. (Round your percentage answer to 1 decimal place (t.e., 01234 should be entered as 12.3).) 2. Net profit margin percentage. (Round your percentage answer to 1 decimal place (le, 0.1234 should be entered as 12.3).) 3. Return on total assets. (Round your percentage answer to 1 decimal place (.e., 0.1234 should be entered as 12.3).) 4. Return on equity. (Round your percentage answer to 2 decimal places (e. 01234 should be entered as 12.34).) 1. Grous margin percentage 9. Net profit margin percentage 3. Return on totales 4. Return on equity
