Exercise 16-6 (Algo) Financial Ratios for Assessing Market Performance [LO16-6]

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 860,000 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 companys common stock at the end of this year was $21.00. All of the companys sales are on account.

Weller Corporation Comparative Balance Sheet (dollars in thousands)
	This Year	Last Year
Assets
Current assets:
Cash	$ 976	$ 1,920
Accounts receivable, net	15,000	10,050
Inventory	10,000	8,440
Prepaid expenses	1,860	2,220
Total current assets	27,836	22,630
Property and equipment:
Land	6,600	6,600
Buildings and equipment, net	19,800	19,600
Total property and equipment	26,400	26,200
Total assets	$ 54,236	$ 48,830
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$ 10,100	$ 8,600
Accrued liabilities	720	1,000
Notes payable, short term	360	360
Total current liabilities	11,180	9,960
Long-term liabilities:
Bonds payable	6,250	6,250
Total liabilities	17,430	16,210
Stockholders' equity:
Common stock	860	860
Additional paid-in capital	4,500	4,500
Total paid-in capital	5,360	5,360
Retained earnings	31,446	27,260
Total stockholders' equity	36,806	32,620
Total liabilities and stockholders' equity	$ 54,236	$ 48,830

Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands)
	This Year	Last Year
Sales	$ 85,000	$ 80,000
Cost of goods sold	55,000	51,000
Gross margin	30,000	29,000
Selling and administrative expenses:
Selling expenses	9,100	8,600
Administrative expenses	12,600	11,600
Total selling and administrative expenses	21,700	20,200
Net operating income	8,300	8,800
Interest expense	750	750
Net income before taxes	7,550	8,050
Income taxes	3,020	3,220
Net income	4,530	4,830
Dividends to common stockholders	344	688
Net income added to retained earnings	4,186	4,142
Beginning retained earnings	27,260	23,118
Ending retained earnings	$ 31,446	$ 27,260

Required:

Compute the following financial data for this year:

1. Earnings per share. (Round your answer to 2 decimal places.)

2. Price-earnings ratio. (Round your intermediate calculations and final answer to 2 decimal places.)

3. Dividend payout ratio. (Round your intermediate calculations and final answer to 2 decimal places.)

4. Dividend yield ratio. (Round your intermediate calculations and final answer to 2 decimal places.)

5. Book value per share. (Round your answer to 2 decimal places.)