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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. Weller Corporation Comparative Balance Sheet (dollars in thousands)

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. Weller Corporation Comparative Balance Sheet (dollars in thousands)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 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 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 This Year Last Year Dividends to common stockholders Net income added to retained earnings Beginning retained earnings Ending retained earnings $ 1,240 9,600 12,900 740 24, 480 9,800 42,449 52,249 $ 76,729 $ 18,600 1,030 0 19,630 9,800 29,430 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) 2,000 4,000 6,000 41, 299 47,299 $ 76,729 11,500 6,500 18,000 12,000 980 11,020 4,408 6,612 280 $ 1,290 8,000 11,000 660 20,950 6,332 34,967 $ 41,299 9,800 39,087 48,887 $ 69,837 18, 200 710 160 19,070 9,800 28,870 This Year Last Year $68,000 $ 64,000 38,000 39,000 30,000 25,000 2,000 4,000 6,000 34,967 40,967 $ 69,837 10,500 6,600 17,100 7,900 980 6,920 2,768 4, 152 525 3,627 31,340 $34,967
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 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 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 This Year Last Year Dividends to common stockholders Net income added to retained earnings Beginning retained earnings Ending retained earnings $ 1,240 9,600 12,900 740 24, 480 9,800 42,449 52,249 $ 76,729 $ 18,600 1,030 0 19,630 9,800 29,430 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) 2,000 4,000 6,000 41, 299 47,299 $ 76,729 11,500 6,500 18,000 12,000 980 11,020 4,408 6,612 280 $ 1,290 8,000 11,000 660 20,950 6,332 34,967 $ 41,299 9,800 39,087 48,887 $ 69,837 18, 200 710 160 19,070 9,800 28,870 This Year Last Year $68,000 $ 64,000 38,000 39,000 30,000 25,000 2,000 4,000 6,000 34,967 40,967 $ 69,837 10,500 6,600 17,100 7,900 980 6,920 2,768 4, 152 525 3,627 31,340 $34,967
Required: Compute the following financial ratios for this year: 1. Times interest earned ratio. 2. Debt-to-equity ratio. 3. Equity multiplier. (For all requirements, round your answers to 2 decimal places.) 1. Times interest earned ratio 2. Debt-to-equity ratio 3. Equity multiplier
Transcribed Image Text:Required: Compute the following financial ratios for this year: 1. Times interest earned ratio. 2. Debt-to-equity ratio. 3. Equity multiplier. (For all requirements, round your answers to 2 decimal places.) 1. Times interest earned ratio 2. Debt-to-equity ratio 3. Equity multiplier
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