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 500,000 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 $28. All of the company's sales are on account. 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 Weller Corporation Comparative Balance Sheet (dollars in thousands) 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 Weller Corporation This Year $ 1,100 9,500 13,100 760 24,460 10,600 42,904 53,504 $ 77,964 $ 19,700 1,050 0 20,750 9,300 30,050 2,000 4,000 6,000 41,914 47,914 $ 77,964 Last Year $ 1,310 6,700 10,600 520 19,130 10,600 38,912 49,512 $ 68,642 $ 18,400 870 160 19,430 9,300 28,730 2,000 4,000 6,000 33,912 39,912 $ 68,642
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 500,000 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 $28. All of the company's sales are on account. 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 Weller Corporation Comparative Balance Sheet (dollars in thousands) 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 Weller Corporation This Year $ 1,100 9,500 13,100 760 24,460 10,600 42,904 53,504 $ 77,964 $ 19,700 1,050 0 20,750 9,300 30,050 2,000 4,000 6,000 41,914 47,914 $ 77,964 Last Year $ 1,310 6,700 10,600 520 19,130 10,600 38,912 49,512 $ 68,642 $ 18,400 870 160 19,430 9,300 28,730 2,000 4,000 6,000 33,912 39,912 $ 68,642
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Exercise 14-4 (Algo) Financial Ratios for Debt Management [LO14-4]
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 500,000 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 $28. All of the company's sales
are on account.
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
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
Accrued liabilities
Notes payable, short termi
Total current liabilities.
Long-term liabilities:
Bonds payable
Total liabilities
Stockholders' equity:
Common stock
Weller Corporation
Comparative Balance Sheet
(dollars in thousands)
Additional paid-in capital
Total paid-in capital
Retained earnings
Total stockholders' equity
Total liabilities and stockholders' equity
Fa
Weller Corporation
This Year.
$1,100
9,500
13,100
760
24,460
10,600
42,904
53,504
$ 77,964
$ 19,700
1,050
0
20,750
9,300
30,050
2,000
4,000
6,000
41,914
47,914
$ 77,964
Last Year
$ 1,310
6,700
10,600
520
19,130
10,600
38,912
49,512
$ 68,642
$ 18,400
870
160
19,430
9,300
28,730
2,000
4,000
6,000
33,912
39,912
$ 68,642](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe1aeac00-eaa5-4c0e-a9c2-4672633aca7c%2F0c76dcd6-7ecd-4786-9286-19d5f8f2a87a%2Fkzq7zcr_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Exercise 14-4 (Algo) Financial Ratios for Debt Management [LO14-4]
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 500,000 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 $28. All of the company's sales
are on account.
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
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
Accrued liabilities
Notes payable, short termi
Total current liabilities.
Long-term liabilities:
Bonds payable
Total liabilities
Stockholders' equity:
Common stock
Weller Corporation
Comparative Balance Sheet
(dollars in thousands)
Additional paid-in capital
Total paid-in capital
Retained earnings
Total stockholders' equity
Total liabilities and stockholders' equity
Fa
Weller Corporation
This Year.
$1,100
9,500
13,100
760
24,460
10,600
42,904
53,504
$ 77,964
$ 19,700
1,050
0
20,750
9,300
30,050
2,000
4,000
6,000
41,914
47,914
$ 77,964
Last Year
$ 1,310
6,700
10,600
520
19,130
10,600
38,912
49,512
$ 68,642
$ 18,400
870
160
19,430
9,300
28,730
2,000
4,000
6,000
33,912
39,912
$ 68,642
Transcribed Image Text:een Homework Assignment
Keltained earnings
Total stockholders' equity
Total liabilities and stockholders' equity
Sales
Cost of goods sold.
Gross margin
Selling and administrative expenses:
Selling expenses
Weller Corporation
Comparative Income Statement and Reconciliation
(dollars in thousands)
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.
Saved
(For all requirements, round your answers to 2 decimal places.)
1. Times interest earned ratio
2. Debt-to-equity ratio
3. Equity multiplier
41, 914
47,914
$ 77,964
This Year
$ 75,000
43,000
32,000
10,800
6,600
17,400
14,600
930
13,670
5,468
8,202
200
8,002
33,912
$ 41,914
33, 942
39,912
$ 68,642
Last Year
$ 64,000
42,000
22,000
10,200
6,000
16,200
5,800
930
4,870
1,948
2,922
250
2,672
31, 240
$ 33,912
H
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