Required: Compute the following financial data for this year: 1. Gross margin percentage. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) 2. Net profit margin percentage. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) 3. Return on total assets. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) 4. Return on equity. (Round your percentage answer to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)
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 860,000 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 $0.75 last year and $0.40 this year. The market value of the company’s common stock at the end of the year was $21. All of the company’s sales are on account.
| Weller Corporation Comparative (dollars in thousands) |
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| This Year | Last Year | |||||
| Assets | ||||||
| Current assets: | ||||||
| Cash | $ | 976 | $ | 1,920 | ||
| 15,000 | 10,050 | |||||
| Inventory | 10,000 | 8,440 | ||||
| Prepaid expenses | 1,860 | 2,220 | ||||
| Total current assets | 27,836 | 22,630 | ||||
| Property and equipment: | ||||||
| Land | 6,600 | 6,600 | ||||
| Buildings and equipment, net | 19,800 | 19,600 | ||||
| Total property and equipment | 26,400 | 26,200 | ||||
| Total assets | $ | 54,236 | $ | 48,830 | ||
| Liabilities and |
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| Current liabilities: | ||||||
| Accounts payable | $ | 10,100 | $ | 8,600 | ||
| Accrued liabilities | 720 | 1,000 | ||||
| Notes payable, short term | 360 | 360 | ||||
| Total current liabilities | 11,180 | 9,960 | ||||
| Long-term liabilities: | ||||||
| Bonds payable | 6,250 | 6,250 | ||||
| Total liabilities | 17,430 | 16,210 | ||||
| Stockholders' equity: | ||||||
| Common stock | 860 | 860 | ||||
| Additional paid-in capital | 4,500 | 4,500 | ||||
| Total paid-in capital | 5,360 | 5,360 | ||||
| 31,446 | 27,260 | |||||
| Total stockholders' equity | 36,806 | 32,620 | ||||
| Total liabilities and stockholders' equity | $ | 54,236 | $ | 48,830 | ||
| Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) |
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| This Year | Last Year | |||||
| Sales | $ | 85,000 | $ | 80,000 | ||
| Cost of goods sold | 55,000 | 51,000 | ||||
| Gross margin | 30,000 | 29,000 | ||||
| Selling and administrative expenses: | ||||||
| Selling expenses | 9,100 | 8,600 | ||||
| Administrative expenses | 12,600 | 11,600 | ||||
| Total selling and administrative expenses | 21,700 | 20,200 | ||||
| Net operating income | 8,300 | 8,800 | ||||
| Interest expense | 750 | 750 | ||||
| Net income before taxes | 7,550 | 8,050 | ||||
| Income taxes | 3,020 | 3,220 | ||||
| Net income | 4,530 | 4,830 | ||||
| Dividends to common stockholders | 344 | 688 | ||||
| Net income added to retained earnings | 4,186 | 4,142 | ||||
| Beginning retained earnings | 27,260 | 23,118 | ||||
| Ending retained earnings | $ | 31,446 | $ | 27,260 | ||
Required:
Compute the following financial data for this year:
1. Gross margin percentage. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)
2. Net profit margin percentage. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)
3. Return on total assets. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)
4. Return on equity. (Round your percentage answer to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)
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