Q5

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 $26. 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		$	1,370
Accounts receivable, net		10,300			8,100
Inventory		13,100			11,000
Prepaid expenses		730			600
Total current assets		25,380			21,070
Property and equipment:
Land		10,500			10,500
Buildings and equipment, net		44,020			38,700
Total property and equipment		54,520			49,200
Total assets	$	79,900		$	70,270
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	19,000		$	17,700
Accrued liabilities		1,050			800
Notes payable, short term		0			110
Total current liabilities		20,050			18,610
Long-term liabilities:
Bonds payable		9,500			9,500
Total liabilities		29,550			28,110
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		44,350			36,160
Total stockholders' equity		50,350			42,160
Total liabilities and stockholders' equity	$	79,900		$	70,270

Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands)
	This Year			Last Year
Sales	$	71,000		$	66,000
Cost of goods sold		38,000			38,000
Gross margin		33,000			28,000
Selling and administrative expenses:
Selling expenses		10,800			10,200
Administrative expenses		7,200			6,900
Total selling and administrative expenses		18,000			17,100
Net operating income		15,000			10,900
Interest expense		950			950
Net income before taxes		14,050			9,950
Income taxes		5,620			3,980
Net income		8,430			5,970
Dividends to common stockholders		240			450
Net income added to retained earnings		8,190			5,520
Beginning retained earnings		36,160			30,640
Ending retained earnings	$	44,350		$	36,160

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.)