Exercise 15-6 Financial Ratios for Assessing Market Performance [LO15-6] Comparative financial statements for Weller Corporation, a...

Transcribed Image Text:

Exercise 15-6 Financial Ratios for Assessing Market Performance [LO15-6] 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 990,000 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 company's common stock at the end of this year was $27.50. 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 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 This Year Last Year $ 5,834 $ 6,650 16,300 9,200 10,650 8,960 1,990 2,480 34,774 27,290 7,900 21,100 29,000 $63,774 $11,400 980 490 12,870 10,000 22,870 990 5,150 6,140 34,764 40,904 $63,774 7,900 20,900 28,800 $56,090 $ 9,250 1,650 490 11,390 10,000 21,390 990 5,150 6,140 28,560 34,700 $56,090 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) Sales Cost of goods sold Gross margin Selling and administrative expenses: 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 data for this year: 1. Earnings per share 2. Price-earnings ratio 3. Dividend payout ratio 4. Dividend yield ratio 5. Book value per share This Year Last Year $98,000 $93,000 61,500 57,500 36,500 35,500 % % 10,400 13,900 24,300 12,200 1,200 11,000 7000 4,400 6,600 ,000 396 6,204 28,560 $34,764 9,900 12,900 22,800 12,700 €,700 1,200 11,500 4,600 1,000 6,900 792 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.) 6,108 22,452 $28,560 Exercise 15-6 Financial Ratios for Assessing Market Performance [LO15-6] 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 990,000 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 company's common stock at the end of this year was $27.50. 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 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 This Year Last Year $ 5,834 $ 6,650 16,300 9,200 10,650 8,960 1,990 2,480 34,774 27,290 7,900 21,100 29,000 $63,774 $11,400 980 490 12,870 10,000 22,870 990 5,150 6,140 34,764 40,904 $63,774 7,900 20,900 28,800 $56,090 $ 9,250 1,650 490 11,390 10,000 21,390 990 5,150 6,140 28,560 34,700 $56,090 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) Sales Cost of goods sold Gross margin Selling and administrative expenses: 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 data for this year: 1. Earnings per share 2. Price-earnings ratio 3. Dividend payout ratio 4. Dividend yield ratio 5. Book value per share This Year Last Year $98,000 $93,000 61,500 57,500 36,500 35,500 % % 10,400 13,900 24,300 12,200 1,200 11,000 7000 4,400 6,600 ,000 396 6,204 28,560 $34,764 9,900 12,900 22,800 12,700 €,700 1,200 11,500 4,600 1,000 6,900 792 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.) 6,108 22,452 $28,560