Comparative financial statements for Weller Corporation, a merchandising company, for the year ending December 31 appear...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
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 company's common stock at the end of this year was $30. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) 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 Current liabilities: Accounts payable Liabilities and Stockholders' Equity Accrued liabilities Notes payable, short term Total current liabilities Long-term liabilities: Bonds payable This Year Last Year $ 1,150 9,400 13,900 800 $1,230 7,800 12,100 590 25,250 21,720 9,200 9,200 42,350 51,550 38,670 47,870 $ 76,800 $ 69,590 $ 19,800 1,010 0 $ 17,500 860 130 20,810 18,490 9,500 9,500 30,310 27,990 2,000 2,000 4,000 4,000 6,000 6,000 40,490 35,600 Total stockholders' equity 46,490 41,600 Total liabilities and stockholders' equity $ 76,800 $ 69,590 Total liabilities Stockholders' equity: Common stock Additional paid-in capital Total paid-in capital Retained earnings Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year Sales $ 69,000 $ 65,000 Cost of goods sold 41,000 38,000 Gross margin 28,000 27,000 Selling and administrative expenses: Selling expenses 11,200 10,700 Administrative expenses 7,300 6,500 Total selling and administrative expenses 18,500 17,200 Net operating income 9,500 9,800 Interest expense. 950 950 Net income before taxes 8,550 8,850 Income taxes 3,420 3,540 Net income Dividends to common stockholders Net income added to retained earnings Beginning retained earnings Ending retained earnings 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.) 1. Times interest earned ratio 2. Debt-to-equity ratio 3. Equity multiplier 5,130 5,310 240 450 4,890 35,600 4,860 30,740 $ 40,490 $ 35,600 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 company's common stock at the end of this year was $30. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) 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 Current liabilities: Accounts payable Liabilities and Stockholders' Equity Accrued liabilities Notes payable, short term Total current liabilities Long-term liabilities: Bonds payable This Year Last Year $ 1,150 9,400 13,900 800 $1,230 7,800 12,100 590 25,250 21,720 9,200 9,200 42,350 51,550 38,670 47,870 $ 76,800 $ 69,590 $ 19,800 1,010 0 $ 17,500 860 130 20,810 18,490 9,500 9,500 30,310 27,990 2,000 2,000 4,000 4,000 6,000 6,000 40,490 35,600 Total stockholders' equity 46,490 41,600 Total liabilities and stockholders' equity $ 76,800 $ 69,590 Total liabilities Stockholders' equity: Common stock Additional paid-in capital Total paid-in capital Retained earnings Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year Sales $ 69,000 $ 65,000 Cost of goods sold 41,000 38,000 Gross margin 28,000 27,000 Selling and administrative expenses: Selling expenses 11,200 10,700 Administrative expenses 7,300 6,500 Total selling and administrative expenses 18,500 17,200 Net operating income 9,500 9,800 Interest expense. 950 950 Net income before taxes 8,550 8,850 Income taxes 3,420 3,540 Net income Dividends to common stockholders Net income added to retained earnings Beginning retained earnings Ending retained earnings 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.) 1. Times interest earned ratio 2. Debt-to-equity ratio 3. Equity multiplier 5,130 5,310 240 450 4,890 35,600 4,860 30,740 $ 40,490 $ 35,600
Expert Answer:
Posted Date:
Students also viewed these accounting questions
-
Which form of interpersonal communication is best for long-term retention? Why? Which form is best for getting across subtle nuances of meaning? Why?
-
The new bookkeeper at Karlin Construction Company was asked to write off two accounts totaling $1,710 that had been determined to be uncollectible. Accordingly, he debited accounts receivable for...
-
The screening process for detecting a rare disease is not perfect. Researchers have developed a blood test that is considered fairly reliable. It gives a positive reaction in 98% of the people who...
-
Draft an internal controls fl ow chart for a humane society with four staff members and seven board members. Which aspects of handling of cash, accounting, budgeting, fi nancial statements, and fi...
-
Make versus buy, activity-based costing opportunity costs. (N. Melumad and S. Reichelstein, adapted) The Ace Company produces bicycles. This years expected production is 10,000 units. Currently, Ace...
-
Cost of debt with fees. Kenny Enterprises will issue a bond with a par value of $1,000, a maturity of twenty years, and a coupon rate of 8.7% with semiannual payments, and will use an investment bank...
-
Question 3 (31 points): Let's use the data below that relates to the cost of modifying equipment, when implementing the ISO 9000 international quality assurance standards process, for a sample of 72...
-
How can you use segment reporting to evaluate the performance of the team today? (5 team member) You need to explain how each and every segment (ie every member of your team) is contributing (or not)...
-
Based on a budgeted capacity of 25,000 machine hours, CC Ltd set the following standard cost per unit for 20X8: Fixed overhead (4 machine hours at $12): $48 Variable overhead (4 machine hours at $9):...
-
For SQL Server what login type do you prefer? Window or SQL Server authentication? Why? Provide a brief explanation? Assume you have access to Window Active Directory Service
-
Explore the concept of microkernel architecture in operating systems, detailing its benefits in terms of modularity, extensibility, and fault isolation, as well as its challenges in terms of...
-
1. On 31 March 2016 the bank account in the general ledger reflected a debit balance of R40 000. 2. Sales figures before taking any discounts in respect of cash or credit sales are: March R April R...
-
The forecast for each week of a four-week schedule is 50 units. The MPS rule is to schedule production if the projected on-hand inventory would be negative without it. Customer orders (committed) are...
-
1. Advertising for eyeglasses _________ (increases/decreases) the price of eyeglasses because advertising promotes _________. 2. An advertisement that succeeds in getting consumers to try the product...
-
A service enterprise performs services in the amount of \(\$ 500\) for a customer in May and receives payment in June. In which month is the \(\$ 500\) of revenue recognized? What is the journal...
-
Late in March, Classic Auto Painters purchased paint on account, with payment due in 60 days. The company used the paint to paint customers' cars during the first three weeks of April. Late in May,...
-
How does the accrual basis of accounting differ from the cash basis of accounting? Which gives a more accurate picture of the profitability of a business? Explain.
Study smarter with the SolutionInn App