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 980,000 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 $0.40. The market value of the company’s common stock at the end of the year was $27.00. 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 980,000 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 $0.40. The market value of the company’s common stock at the end of the year was $27.00. All of the company’s sales are on account.

Explanation / Answer

Solution:

1 Gross margin percentage = Gross margin / Net sales * 100 Gross margin percentage = 37.11% Gross margin = 36,000 Net Sales = 97,000 2 Net profit margin percentage = Net profit / Net sales * 100 Net profit margin percentage = 6.71% Net profit 6,510 Net sales 97,000 3 Return on total assets = Net income / Average total assets Return on total assets = 11.16% Net income 6,510 Average total assets = 58,359 Average total assets = ( Beginning total assets + Ending total assets ) / 2 Beginning total assets 54,570 Ending total assets 62,148 4 Return on equity = Net Income / Average stockholder's equity Return on equity = 17.31% Net Income 6,510 Average stockholder's equity 37,599 Average stockholder's equity = ( Beginning stockholer's equity + Ending stockholder's equity ) / 2 Beginning stockholer's equity 34,540 Ending stockholder's equity 40,658

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