Comparative financial statements for Weller Corporation, a merchandising company, for the year ending December 31 appear...

  

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 700,000 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 $25. All of the company's sales are on account. Assets Current assets: Cash Weller Corporation Comparative Balance Sheet (dollars in thousands) 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 This Year $ 1,180 10, 200 12,800 780 24,960 10,100 48,003 58,103 $ 83,063 Last Year $ 1,280 7,000 10,700 640 19,620 10,100 44, 159 54,259 $ 73,879 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 Additional paid-in capital Total paid-in capital Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 19,700 1,040 0 20,740 Sales Cost of goods sold. Gross margin Selling and administrative expenses: Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) 8,600 29,340 2,000 4,000 6,000 47,723 53,723 $ 83,063 This Year $ 72,000 38,000 34,000 $ 19,400 880 140 20,420 8,600 29,020 2,000 4,000 6,000 38,859 44,859 $ 73,879 Last Year $ 66,000 34,000 32,000 3 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 Required: Compute the following financial ratios for this year: 1. Times interest earned ratio. 2. Debt-to-equity ratio. 3. Equity multiplier. 10,900 7,000 17,900 16,100 860 15, 240 6,096 9,144 280 8,864 38,859 $ 47,723 10,500 6,900 17,400 14,600 860 13,740 5,496 8,244 525 7,719 31,140 $ 38,859 Check my work 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 700,000 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 $25. All of the company's sales are on account. Assets Current assets: Cash Weller Corporation Comparative Balance Sheet (dollars in thousands) 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 This Year $ 1,180 10, 200 12,800 780 24,960 10,100 48,003 58,103 $ 83,063 Last Year $ 1,280 7,000 10,700 640 19,620 10,100 44, 159 54,259 $ 73,879 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 Additional paid-in capital Total paid-in capital Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 19,700 1,040 0 20,740 Sales Cost of goods sold. Gross margin Selling and administrative expenses: Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) 8,600 29,340 2,000 4,000 6,000 47,723 53,723 $ 83,063 This Year $ 72,000 38,000 34,000 $ 19,400 880 140 20,420 8,600 29,020 2,000 4,000 6,000 38,859 44,859 $ 73,879 Last Year $ 66,000 34,000 32,000 3 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 Required: Compute the following financial ratios for this year: 1. Times interest earned ratio. 2. Debt-to-equity ratio. 3. Equity multiplier. 10,900 7,000 17,900 16,100 860 15, 240 6,096 9,144 280 8,864 38,859 $ 47,723 10,500 6,900 17,400 14,600 860 13,740 5,496 8,244 525 7,719 31,140 $ 38,859 Check my work

Answer rating: 100% (QA)

Times interest earned ratio Net income before taxes In... View the full answer