Comparative financial statements for Weller Corporation, a merchandising company

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 800,000 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 $18. All of the company’s sales are on account.

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

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

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

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

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 800,000 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 $18. All of the company’s sales are on account.

Explanation / Answer

1 Gross margin Percentage= Gross Margin/Sales This Year last year Sales (A) 79000 74000 Gross margin (B) 27000 26000 Gross margin Percentage (B/A) 34.2% 35.1% 2 Net profit margin Percentage= Net Profit /Sales This Year last year Sales (A) 79000 74000 Net margin (B) 3540 3840 Net profit margin Percentage (B/A) 4.5% 5.2% 3 Return on total Assets EBIT/Total Net assets EBIT is Earning before Interest and tax This Year last year EBIT (A) 6500 7000 Net Assets (B) 50280 45960 Return on total Assets (A/B) 12.9% 15.2% 4 Return on Equity Net Income/Shareholders Equity This Year last year Net Income (A) 3540 3840 Shareholders Equity (B) 34880 31660 Return on Equity (A/B) 10.1% 12.1%

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