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 870,000 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 $21.50. All of the company's sales are on account.Required:Compute the following financial data for this year:1. Earnings per share. (Round your answer to 2 decimal places.)2. Price-earnings ratio. (Round your intermediate calculations and final answer to 2 decimal places.)3. Dividend payout ratio. (Round your intermediate calculations and final answer to 2 decimal places.)4. Dividend yeild ratio. (Round your intermediate calculatioms and final answer to 2 decimal places.)5. Book value per share. (Round your answer to 2 decimal places.) Weller CorporationComparative Income Statement and Reconciliation(dollars in thousands)This Year Last Year$86,000Sales$81,000Cost of goods soldGross margin55,50051,50030,50029,500Selling and administrative expenses:Selling expensesAdministrative expenses9,20012,7008,70011,70020,40021,900Total selling and administrative expensesNet operating income8,6009009,100Interest expense900Net income before taxes7,7003,0804,6203488,2003,2804,920Income taxesNet income696Dividends to common stockholdersNet income added to retained earnings4,27227,3604,22423,136Beginning retained earningsEnding retained earnings$31,632$27,360 Weller CorporationComparative Balance Sheet(dollars in thousands)This Year Last YearAssetsCurrent assets:$ 2,24215,100$ 3,130CashAccounts receivable, net10,1008,4802,240Inventory10,0501,870Prepaid expensesTotal current assets29,26223,950Property and equipment:6,70019,9006,70019,700LandBuildings and equipment, netTotal property and equipment26, 60026,400Total assets$55,862$50,350Liabilities and Stockholders' EquityCurrent liabilities:Accounts payable$10,200$ 8,650Accrued liabilities7401,050Notes payable, short term370370Total current liabilities11,31010,070Long-term liabilities:Bonds payable7,50017,5707,500Total liabilities18,810Stockholders' equity:Common stock8708704,5504,550Additional paid-in capitalTotal paid-in capitalRetained earnings5,42031,6325,42027,360Total stockholders' equity37,05232,780Total liabilities and stockholders' equity$55,862$50,350

EPS stands for Earnings Per Share, which measures or evaluates how many amount of net income earned…

Answered: Comparative financial statements for…

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 870,000 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 $21.50. All of the company's sales are on account.

Required:
Compute the following financial data for this year:

1. Earnings per share. (Round your answer to 2 decimal places.)
2. Price-earnings ratio. (Round your intermediate calculations and final answer to 2 decimal places.)
3. Dividend payout ratio. (Round your intermediate calculations and final answer to 2 decimal places.)
4. Dividend yeild ratio. (Round your intermediate calculatioms and final answer to 2 decimal places.)
5. Book value per share. (Round your answer to 2 decimal places.)

Weller Corporation
Comparative Income Statement and Reconciliation
(dollars in thousands)
This Year Last Year
$86,000
Sales
$81,000
Cost of goods sold
Gross margin
55,500
51,500
30,500
29,500
Selling and administrative expenses:
Selling expenses
Administrative expenses
9,200
12,700
8,700
11,700
20,400
21,900
Total selling and administrative expenses
Net operating income
8,600
900
9,100
Interest expense
900
Net income before taxes
7,700
3,080
4,620
348
8,200
3,280
4,920
Income taxes
Net income
696
Dividends to common stockholders
Net income added to retained earnings
4,272
27,360
4,224
23,136
Beginning retained earnings
Ending retained earnings
$31,632
$27,360

Weller Corporation
Comparative Balance Sheet
(dollars in thousands)
This Year Last Year
Assets
Current assets:
$ 2,242
15,100
$ 3,130
Cash
Accounts receivable, net
10,100
8,480
2,240
Inventory
10,050
1,870
Prepaid expenses
Total current assets
29,262
23,950
Property and equipment:
6,700
19,900
6,700
19,700
Land
Buildings and equipment, net
Total property and equipment
26, 600
26,400
Total assets
$55,862
$50,350
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
$10,200
$ 8,650
Accrued liabilities
740
1,050
Notes payable, short term
370
370
Total current liabilities
11,310
10,070
Long-term liabilities:
Bonds payable
7,500
17,570
7,500
Total liabilities
18,810
Stockholders' equity:
Common stock
870
870
4,550
4,550
Additional paid-in capital
Total paid-in capital
Retained earnings
5,420
31,632
5,420
27,360
Total stockholders' equity
37,052
32,780
Total liabilities and stockholders' equity
$55,862
$50,350

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