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 990,000 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 this year was $28. All of the company’s sales are on account.Required:Compute the following financial data for this year to complete the table:A. Gross margin percentage. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)B. Net profit margin percentage. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)C. Return on total assets. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)D. Return on equity. (Round your percentage answer to 2 decimal places (i.e., 0.1234 should be entered as 12.34).) Weller CorporationComparative Income Statement and Reconciliation(dollars in thousands)This Year Last Year$98,00061,50036,500$93,00057,50035,500SalesCost of goods soldGross marginSelling and administrative expenses:Selling expensesAdministrative expensesTotal selling and administrative expensesNet operating incomeInterest expense10,40013,90024,30012,2001,20011,0004,4006,6003966,20428,560$34,7649,90012,90022,80012,7001,20011,5004,6006,9007926,10822,452Net income before taxesIncome taxesNet incomeDividends to common stockholdersNet income added to retained earningsBeginning retained earningsEnding retained earnings$28,560Required:Compute the following financial data for this year:1. Gross margin percentage. (Round your percentage answer to 1 decimal place (i.e., O.1234 should beentered as 12.3).)2. Net profit margin percentage. (Round your percentage answer to 1 decimal place (i.e., 0.1234 shouldbe entered as 12.3).)3. Return on total assets. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should beentered as 12.3).)4. Return on equity. (Round your percentage answer to 2 decimal places (i.e., 0.1234 should be enteredas 12.34).)1. Gross margin percentage%2. Net profit margin percentage%3. Return on total assets%4. Return on equity% Comparative financial statements for Weller Corporation, a merchandising company, for the year endingDecember 31 appear below. The company did not issue any new common stock during the year. A total of990,000 shares of common stock were outstanding. The interest rate on the bond payable was 12%, theincome tax rate was 40%, and the dividend per share of common stock was $0.75 last year and $0.40 thisyear. The market value of the company's common stock at the end of this year was $28. All of thecompany's sales are on account.Weller CorporationComparative Balance Sheet(dollars in thousands)This Year Last YearAssetsCurrent assets:CashAccounts receivable, netInventoryPrepaid expensesTotal current assets$ 5,83416,30010,6501,99034,774$ 6,6509,2008,9602,48027,290Property and equipment:LandBuildings and equipment, netTotal property and equipment7,90021,10029,000$63,7747,90020,90028,800$56,090Total assetsLiabilities and Stockholders' EquityCurrent liabilities:Accounts payableAccrued liabilitiesNotes payable, short termTotal current liabilities$11,40098049012,870$ 9,2501,65049011,390Long-term liabilities:Bonds payableTotal liabilitiesStockholders' equity:Common stockAdditional paid-in capitalTotal paid-in capitalRetained earningsTotal stockholders' equity10,00022,87010,00021,3909905,1506,14034,76440,9049905,1506,14028,56034,700Total liabilities and stockholders' equity$63,774$56,090

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Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter12: Fainancial Statement Analysis

Section: Chapter Questions

Problem 87PSB

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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 990,000 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 this year was $28. All of the company’s sales are on account.

Required:

Compute the following financial data for this year to complete the table:

A. Gross margin percentage. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)

B. Net profit margin percentage. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)

C. Return on total assets. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)

D. Return on equity. (Round your percentage answer to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)

Weller Corporation
Comparative Income Statement and Reconciliation
(dollars in thousands)
This Year Last Year
$98,000
61,500
36,500
$93,000
57,500
35,500
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
10,400
13,900
24,300
12,200
1,200
11,000
4,400
6,600
396
6,204
28,560
$34,764
9,900
12,900
22,800
12,700
1,200
11,500
4,600
6,900
792
6,108
22,452
Net income before taxes
Income taxes
Net income
Dividends to common stockholders
Net income added to retained earnings
Beginning retained earnings
Ending retained earnings
$28,560
Required:
Compute the following financial data for this year:
1. Gross margin percentage. (Round your percentage answer to 1 decimal place (i.e., O.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).)
1. Gross margin percentage
%
2. Net profit margin percentage
%
3. Return on total assets
%
4. Return on equity
%

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
990,000 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 this year was $28. All of the
company's sales are on account.
Weller Corporation
Comparative Balance Sheet
(dollars in thousands)
This Year Last Year
Assets
Current assets:
Cash
Accounts receivable, net
Inventory
Prepaid expenses
Total current assets
$ 5,834
16,300
10,650
1,990
34,774
$ 6,650
9,200
8,960
2,480
27,290
Property and equipment:
Land
Buildings and equipment, net
Total property and equipment
7,900
21,100
29,000
$63,774
7,900
20,900
28,800
$56,090
Total assets
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
Accrued liabilities
Notes payable, short term
Total current liabilities
$11,400
980
490
12,870
$ 9,250
1,650
490
11,390
Long-term liabilities:
Bonds payable
Total liabilities
Stockholders' equity:
Common stock
Additional paid-in capital
Total paid-in capital
Retained earnings
Total stockholders' equity
10,000
22,870
10,000
21,390
990
5,150
6,140
34,764
40,904
990
5,150
6,140
28,560
34,700
Total liabilities and stockholders' equity
$63,774
$56,090

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