5. Return on total assets6. Return on common stockholders' equity Case 2Comparative financial statements for Weller Corporation for the fi scal year ending December 31 appear below. The company did notissue any new common or preferred stock during the year. A total of 800,000 shares of common stock were outstanding. The interestrate on the bond payable was 12%, the income tax rate was 40%, and the dividend per share of common stock was $0.25.The market value of the company's common stock at the end of the year was $18. All of the company's sales are on account.Use 365 days for the ratios.Weller CorporationWeller CorporationComparative Balance SheetComparative Income Statement and Reconciliation(dollars in thousands)(dollars in thousands)This Year Last YearThis Year Last YearSalesCost of goods soldGross marginAssets79,00074,000Current assets:52,00027,00048,000Cash1280156026,00012,3009,700Accounts, receivable, net9,100Selling and administrative expenses:Selling expensesAdministrative expensesTotal selling & admin. expensesNet operating incomeInterest expenseNet income before taxesIncome taxes (40%)Net incomeDividends to preferred stockholdersNet income remaining for common stockholder:Dividend to common stockholdersNet income added to retained earningsRetained earnings, beginning of the yearRetained earnings, end of the yearInventory8,200Prepaid expenses1,8002,1008,50012.00020,5008,000Total current assets25,08020,9601,00019,000Property and equipmentLand6,5007,0006,0006,000600600Buildings and equipment, netTotal property and equipmentTotal assets19,20019,0005,9006,40025,20050,28025,00045,9602,3603,5402,5603,840120400Liabilities & Stockholders' EquityCurrent liabilities:Accounts payable3,4203,4402002009,5008,3003,2203,240Accrued payablesNotes payable, short term60070026,66029,88023,42026,660300300Total current liabilitiesLong-term liabilities10,4009,3005,000Bonds payableTotal liabilities5,00015,40014,300Stockholders' equity:Preferred stock2,0002,000Common stock800Additional paid-in capitalTotal paid-in capitalRetained EarningsTotal stockholders' equityTotal liabilities & stockholders' equity8002,2005,00026,66031.66045,9602.2005,00029,88034,88050,280

Return on total assets = (Net income + interest expense)/Average total assets Return on common…

Case 2 Comparative financial statements for Weller Corporation for the fi scal year ending December 31 appear below. The company did not issue any new common or preferred stock during the year. A total of 800,000 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 $0.25. The market value of the company's common stock at the end of the year was $18. All of the company's sales are on account. Use 365 days for the ratios. Weller Corporation Weller Corporation Comparative Balance Sheet (dollars in thousandsa) Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year This Year Last Year Sales Cost of goods sold Gross margin Assets 79,000 74,000 Current assets: 52,000 48,000 27,000 26,000 1,280 12,300 9.700 Cash 1,560 Accounts, receivable, net 9,100 Selling and administrative expenses: Selling expenses Administrative expenses Total selling & admin expenses Net operating income Interest expense Net income before taxes Income taxes (40%) Net income Inventory 8,200 Prepaid expenses Total current assets 1,800 2,100 8,500 8,000 25,080 20,960 12,000 20,500 6,500 600 5,900 11.000 19,000 7,000 600 6,400 Property and equipment Land 6.000 Buildings and equipment, net Total property and equipment Total assets 6,000 19,000 25,000 45,960 19,200 25,200 2,360 2,560 3,840 50,20 3.540 Dividends to preferred stockholders 120 400 Net income remaining for common stockholdert Liabilities & Stockholdera' Equity Current liabilities: Accounts payable Accrued payables Notes payable, short term Total current liabilities Long-term liabilities Bonds payable Total liabilities 3,420 200 3,440 200 3.240 Dividend to common stockholders Net income added to retained earrings Retained earnings, beginning of the year Retained earnings, end of the year 9,500 8,300 3,220 600 300 700 300 9.300 26,660 23,420 29,880 26,660 10,400 5,000 5,000 15.400 14,300 Stockholders' equity. Preferred stock 2.000 800 2,000 Common stock 800 Additional paid-in capital Total paid-in capital Retained Earnings Total stockholders' equity Total liabilities & stockholdere' equity 2,200 2,200 5,000 5,000 29,880 34,880 50.280 26,660 31660 45,960