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 CorporationComparative Balance Sheet(dollars in thousands) This YearLast YearAssets Current assets: Cash$976 $1,920 Accounts receivable, net 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 Stockholders' Equity 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 Retained earnings 31,446 27,260 Total stockholders' equity 36,806 32,620 Total liabilities and stockholders' equity$54,236 $48,830 Weller CorporationComparative Income Statement and Reconciliation(dollars in thousands) This YearLast YearSales$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).) 1.Gross margin percentage %2.Net profit margin percentage %3.Return on total assets %4.Return on equity %

Gross Margin % = {Gross Margin / Sales}*100 = {…

Answered: Required: Compute the following…

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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Question

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 Balance Sheet (dollars in thousands)
	This Year	Last Year
Assets
Current assets:
Cash	$	976	$	1,920
Accounts receivable, net		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 Stockholders' Equity
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
Retained earnings		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)
	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).)


1.	Gross margin percentage	%
2.	Net profit margin percentage	%
3.	Return on total assets	%
4.	Return on equity	%

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