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Questions: 1. Return on total assets 2. Return on common stockholder's equity 3. Book value per share

Questions: 1. Return on total assets 2. Return on common stockholder's equity 3. Book value per share

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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1. Return on total assets

2. Return on common stockholder's equity

3. Book value per share

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 Comparative Income Statement and Reconciliation (dollars in thousands) (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 27,000 48,000 Cash 1280 1560 26,000 12,300 9,700 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 Dividends to preferred stockholders Net income remaining for common stockholder: Dividend to common stockholders Net income added to retained earnings Retained earnings, beginning of the year Retained earnings, end of the year Inventory 8,200 Prepaid expenses 1,800 2,100 8,500 12.000 20,500 8,000 Total current assets 25,080 20,960 1,000 19,000 Property and equipment Land 6,500 7,000 6,000 6,000 600 600 Buildings and equipment, net Total property and equipment Total assets 19,200 19,000 5,900 6,400 25,200 50,280 25,000 45,960 2,360 3,540 2,560 3,840 120 400 Liabilities & Stockholders' Equity Current liabilities: Accounts payable 3,420 3,440 200 200 9,500 8,300 3,220 3,240 Accrued payables Notes payable, short term 600 700 26,660 29,880 23,420 26,660 300 300 Total current liabilities Long-term liabilities 10,400 9,300 5,000 Bonds payable Total liabilities 5,000 15,400 14,300 Stockholders' equity: Preferred stock 2,000 2,000 Common stock 800 Additional paid-in capital Total paid-in capital Retained Earnings Total stockholders' equity Total liabilities & stockholders' equity 800 2,200 5,000 26,660 31.660 45,960 2.200 5,000 29,880 34,880 50,280
Transcribed Image Text: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 Comparative Income Statement and Reconciliation (dollars in thousands) (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 27,000 48,000 Cash 1280 1560 26,000 12,300 9,700 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 Dividends to preferred stockholders Net income remaining for common stockholder: Dividend to common stockholders Net income added to retained earnings Retained earnings, beginning of the year Retained earnings, end of the year Inventory 8,200 Prepaid expenses 1,800 2,100 8,500 12.000 20,500 8,000 Total current assets 25,080 20,960 1,000 19,000 Property and equipment Land 6,500 7,000 6,000 6,000 600 600 Buildings and equipment, net Total property and equipment Total assets 19,200 19,000 5,900 6,400 25,200 50,280 25,000 45,960 2,360 3,540 2,560 3,840 120 400 Liabilities & Stockholders' Equity Current liabilities: Accounts payable 3,420 3,440 200 200 9,500 8,300 3,220 3,240 Accrued payables Notes payable, short term 600 700 26,660 29,880 23,420 26,660 300 300 Total current liabilities Long-term liabilities 10,400 9,300 5,000 Bonds payable Total liabilities 5,000 15,400 14,300 Stockholders' equity: Preferred stock 2,000 2,000 Common stock 800 Additional paid-in capital Total paid-in capital Retained Earnings Total stockholders' equity Total liabilities & stockholders' equity 800 2,200 5,000 26,660 31.660 45,960 2.200 5,000 29,880 34,880 50,280
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