Return to ques Exercise 14-5 (Algo) Financial Ratios for Assessing Profitability [LO14-5] 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 910,000 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 $24. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year 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 Patal Purrant abilitie $ 1,506 15,500 $ 1,720 10,300 10,250 8,640 1,910 2,320 29,166 22,980 7,100 7,100 20,300 20,100 27,400 27,200 $ 56,566 $50,180 $ 10,600 020 410 11 930 $ 8,850 1,250 410 10 510 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 410 410 11,830 10,510 6,250 18,080 6,250 16,760 910 910 4,750 4,750 5,660 5,660 32,826 27,760 38,486 33,420 $ 56,566 $ 50,180 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year. $ 90,000 Last Year $ 85,000 53,500 31,500 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: 57,500 32,500 9,600 9,100 13,100 12,100 22,700 21,200 9,800 10,300 750 750 9,050 9,550 3,620 3,820 5,430 5,730 364 728 5,066 27,760 5,002 22,758 $ 32,826 $ 27,760 1. Gross margin percentage. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) 2. Net profit margin percentage. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) 3. Return on total assets. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) 4. Return on equity. (Round your percentage answer to 2 decimal places (i.e., 0.1234 should be entered as 12.34).) Answer is complete but not entirely correct. 1. Gross margin percentage 2. Net profit margin percentage 3. Return on total assets 4. Return on equity 36.1 % 16.7 % 18.4 % 15.10 %