Comparative financial statements for Weller Corporation, a merchandising company
ID: 2456137 • Letter: C
Question
Comparative financial statements for Weller Corporation, a merchandising company, for the fiscal year ending December 31 appear below. The company did not issue any new common stock during the year. A total of 500,000 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 the year was $26. All of the company’s sales are on account.
Required: Compute the following financial ratios for this year:Explanation / Answer
Times interest earned ratio = EBIT / Interest expense = 16700 / 960 = 17.4
Debt to equity ratio = Total Liabilities / Total Stockholder's equity = 52258 / 30050 = 1.74
Equity multiplier = Total assets / Total stockholder's equity = 82308 / 52258 = $1.58
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