Exercise 16-5 (Algo) Financial Ratios for Assessing Profitability [LO16-5] 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 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 this year was $22. All of the company's sales are on account. Weller forporation. Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year Additional paid-in capital 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 Total paid-in capital $ 3,508 $ 4,340 15,200 10,150 10,100 8,520 1,880 2,260 30,688 25,270 6,800 6,800 20,000 19,800 26,800 26,600 $ 57,488 $ 51,870 $ 10,300 760 $ 8,700 1,100 380 380 11,440 10,180 8,750 8,750 20,190 18,930 880 880 4,600 4,600 5,480 5,480 Retained earnings 31,818 27,460 Total stockholders' equity 37,298 32,940 Total liabilities and stockholders' equity $ 57,488 $ 51,870 Sales Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) Cost of goods sold Gross margin Selling and administrative expenses: Selling expenses 'Administrative expenses Total selling and administrative expenses Net operating income Interest expense Net income before taxes. Income taxes Net income Dividends to common stockholders Net income added to retained earnings. Beginning retained earnings Ending retained earnings This Year Last Year $ 87,000 $82,000 56,000 52,000 31,000 30,000 9,300. 8,800 12,800 11,800 22,100 20,600 8,900 9,400 1,050 1,050 7,850 8,350 3,140 3,340 4,710. 5,010 352 704 4,358 27,460 4,306 23,154 $ 31,818 $27,460 Required: Compute the following financial data for this year. 1. Gross margin percentage. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) 2. Net profit margin percentage. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) 3. Return on total assets. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) 4. Return on equity. (Round your percentage answer to 2 decimal places (i.e., 0.1234 should be entered as 12.34).) 1. Gross margin percentage 2. Net profit margin percentage 3. Return on total assets 4. Return on equity %