Edit View History Bookmarks Tools Window Help K 29% D?Thu 11 ework 12 Help Save&

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Edit View History Bookmarks Tools Window Help K 29% D?Thu 11 ework 12 Help Save& Exit Submit Exercise 15-4 Financial Ratios for Debt Management [LO15-4) 8 Comparative financial statements for Weller Corporation, a merchandising company, for The company did not issue any new common stock during the year A total of 600,000 shares the year ending December 31 appear below of common stock were outstanding. The rate on the bond payable was the income tax ratewas 40%, and the dividend per share or common stock was SO75last year The market velue of the company's common stock at the end of this year was $29. All of the company's sales year and $0.40 this are on account Ller Cerporatlon Comparative Lance Sheet dollars in thousands) this Tear Last Yesr rent assets 1,208 1,290 Prepaid expense ? ? Property and equipment Daildingn and equimentet 3

Explanation / Answer

Solution 1:

Times interest earned ratio = EBIT / Interest = $9,300 / $970 = 9.59 times

Solution 2:

Debt to equity ratio = Total liabilities /Shareholder's Equity = $29,520 / $46,676 = 0.63:1

Solution 3:

Equity multiplyer = Total Assets / Stockholder's Equity = $76,196 / $46,676 = 1.63 times

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