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 940,000 shares of common stock were outstanding. The thierest rate on the bond payable was 12%, the income tax rate was 40%, and the dividend per shere of common stork was $0.75 fast year and $0,40 this year. The market value of the company's common stock at the end of this year was $25, All of the conpany's sales are on account. Saved Total liabilities Stockholders " equity: Commion stock Additional paid-in capital Total paid-in capital Retained earnings Total stockholders' equity Total liabilities and stockholders' equity \begin{tabular}{rr} \hline 22,220 & 20,840 \\ \hline 940 & 940 \\ 4,900 & 4,900 \\ \hline 5,840 & 5,840 \\ 33,384 & 28,060 \\ \hline 39,224 & 33,900 \\ \hline$61,444 & $54,746 \\ \hline \end{tabular} \begin{tabular}{|c|c|c|} \hline \multicolumn{3}{|c|}{\begin{tabular}{l} Comparative Income Statement and Reconciliation \\ (dollars in thousands) \end{tabular}} \\ \hline & This Year & Lost Year \\ \hline Sales & $93,0e & $88,000 \\ \hline Cost of goods sold & 59,000 & 55,000 \\ \hline Gross margin & 34,000 & 33,000 \\ \hline Selling and administrative expenses: & & \\ \hline selling expenses & 9,900 & 9,400 \\ \hline Adninistrative expenses & 13,4e0 & 12,400 \\ \hline Total selling and administrative expenses & 23,300 & 21,800 \\ \hline tiet operating Incone & 10,760 & 11,200 \\ \hline Interest expense & 1,200 & 1,200 \\ \hline Net income before taxes & 9,500 & 10,000 \\ \hline Income taxes & 3,800 & 4,000 \\ \hline & & \\ \hline \end{tabular} Required: Compute the following financial data for this year: 1. Gross margin percentage: Note: Round your percentage answer to 1 decimal place (h.e., 0,1234 should be entered as 12.3). 2. Net profit matgin percentage. Note: Round your percentage answer to 1 decimal place (i.e., 0,1234 should be entered as 12.3). 3. Return on total assets. Note: Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12,3). 4. Return on equity. Note: Round your percentage answer to 2 decimal places (l.e., 0,1234 should be entered as 12.34). 1. Gross margin percentage. Note: Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3). 2. Net proflt margin percentage. Note: Round your percentage answer to 1 decimal place (l.e., 0.1234 should be entered as 12.3 ). 3. Return on total assets. Note: Round your percentage answer to 1 decimal place (l.e., 0.1234 should be entered as 12.3 ). 4. Return on equity. Note: Round your percentage answer to 2 decimal places (0.e., 0.1234 should be entered as 12.34 )
