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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 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 $24. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year Assets Current assets: $ 1,220 9,000 12,100 780 $ 1,300 8,000 11,700 660 Cash Accounts receivable, net Inventory Prepaid expenses Total current assets 23,100 21,660 Property and equipment: Land 9,800 44,116 9,800 38,738 48,538 $ 70,198 Buildings and equipment, net Total property and equipment 53,916 Total assets $ 77,016 Liabilities and Stockholders' Equity Current liabilities: Accounts payable Accrued liabilities $ 19,000 $ 18,700 930 770 170 Notes payable, short term Total current liabilities 19,930 19,640 Long-term liabilities: Bonds payable 9,200 28,840 9,200 Total liabilities 29,130 Stockholders' equity: Common stock 2,000 4,000 2,000 Additional paid-in capital Total paid-in capital Retained earnings Total stockholders' equity 6,000 41,886 47,886 4,000 6,000 35,358 41,358 Total liabilities and stockholders' equity $ 77,016 $ 70,198

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 $24. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year Assets Current assets: $ 1,220 9,000 12,100 780 $ 1,300 8,000 11,700 660 Cash Accounts receivable, net Inventory Prepaid expenses Total current assets 23,100 21,660 Property and equipment: Land 9,800 44,116 9,800 38,738 48,538 $ 70,198 Buildings and equipment, net Total property and equipment 53,916 Total assets $ 77,016 Liabilities and Stockholders' Equity Current liabilities: Accounts payable Accrued liabilities $ 19,000 $ 18,700 930 770 170 Notes payable, short term Total current liabilities 19,930 19,640 Long-term liabilities: Bonds payable 9,200 28,840 9,200 Total liabilities 29,130 Stockholders' equity: Common stock 2,000 4,000 2,000 Additional paid-in capital Total paid-in capital Retained earnings Total stockholders' equity 6,000 41,886 47,886 4,000 6,000 35,358 41,358 Total liabilities and stockholders' equity $ 77,016 $ 70,198

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter16: Financial Statement Analysis
Section: Chapter Questions
Problem 21E
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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 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 $24. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year Assets Current assets: $ 1,220 9,000 12,100 $ 1,300 8,000 11,700 Cash Accounts receivable, net Inventory Prepaid expenses 780 660 Total current assets 23,100 21,660 Property and equipment: Land 9,800 44,116 9,800 38,738 Buildings and equipment, net Total property and equipment 53,916 48,538 Total assets $ 77,016 $ 70,198 Liabilities and Stockholders' Equity Current liabilities: Accounts payable Accrued liabilities $ 19,000 $ 18,700 930 770 170 Notes payable, short term Total current liabilities 19,930 19,640 Long-term liabilities: Bonds payable 9,200 29,130 9,200 28,840 Total liabilities Stockholders' equity: Common stock 2,000 2,000 Additional paid-in capital Total paid-in capital Retained earnings Total stockholders' equity 4,000 6,000 41,886 47,886 4,000 6,000 35,358 41,358 Total liabilities and stockholders' equity $ 77,016 $ 70,198
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 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 $24. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year Assets Current assets: $ 1,220 9,000 12,100 $ 1,300 8,000 11,700 Cash Accounts receivable, net Inventory Prepaid expenses 780 660 Total current assets 23,100 21,660 Property and equipment: Land 9,800 44,116 9,800 38,738 Buildings and equipment, net Total property and equipment 53,916 48,538 Total assets $ 77,016 $ 70,198 Liabilities and Stockholders' Equity Current liabilities: Accounts payable Accrued liabilities $ 19,000 $ 18,700 930 770 170 Notes payable, short term Total current liabilities 19,930 19,640 Long-term liabilities: Bonds payable 9,200 29,130 9,200 28,840 Total liabilities Stockholders' equity: Common stock 2,000 2,000 Additional paid-in capital Total paid-in capital Retained earnings Total stockholders' equity 4,000 6,000 41,886 47,886 4,000 6,000 35,358 41,358 Total liabilities and stockholders' equity $ 77,016 $ 70,198
Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year $ 71,000 41,000 30,000 $ 66,000 40,000 26,000 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 10,600 7,200 17,800 12,200 10,300 6,500 16,800 9,200 920 920 Net income before taxes 11,280 8,280 4,512 6,768 3,312 4,968 Income taxes Net income Dividends to common stockholders 240 450 Net income added to retained earnings 6,528 35,358 4,518 Beginning retained earnings 30,840 Ending retained earnings $ 41,886 $ 35,358 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:Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year $ 71,000 41,000 30,000 $ 66,000 40,000 26,000 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 10,600 7,200 17,800 12,200 10,300 6,500 16,800 9,200 920 920 Net income before taxes 11,280 8,280 4,512 6,768 3,312 4,968 Income taxes Net income Dividends to common stockholders 240 450 Net income added to retained earnings 6,528 35,358 4,518 Beginning retained earnings 30,840 Ending retained earnings $ 41,886 $ 35,358 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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