Exercise 16-3 (Algo) Financial Ratios for Asset Management [LO16-3] 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 600,000 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 $29. 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 Weller Corporation Comparative Balance Sheet (dollars in thousands) 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 $ 1,200 10,600 12,100 750 24,650 9,200 53,450 62,650 $ 87,300 $ 20,100 910 300 21,310 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) 9,500 30,810 600 4,000 4,600 51,890 56,490 $ 87,300 This Year $ 79,550 34,650 44,900 11,000 7,000 18,000 26,900 950 25,950 10,380 15,570 248 15,330 36,560 $ 51,890 $ 1,310 7,900 11,000 630 20,840 9,200 39,380 48,580 $ 69,420 $ 17,600 860 300 18,760 9,500 28,260 600 ,000 4,600 36,560 41,160 $ 69,420 Last Year $ 65,000 37,000 28,000 10,600 6,000 16,600 11,400 950 10,450 4,180 6,270 450 5,820 30,740 $ 36,560