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 810,000 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 $18.50. 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).)

       

Weller Corporation
Comparative Balance Sheet
(dollars in thousands) This Year Last Year   Assets   Current assets:      Cash $ 2,546 $ 2,770      Accounts receivable, net 12,400 9,150      Inventory 9,750 8,240      Prepaid expenses 1,810 2,120   Total current assets 26,506 22,280   Property and equipment:      Land 6,100 6,100      Buildings and equipment, net 19,300 19,100   Total property and equipment 25,400 25,200   Total assets $ 51,906 $ 47,480   Liabilities and Stockholders' Equity   Current liabilities:      Accounts payable $ 9,600 $ 8,350      Accrued liabilities 620 750      Notes payable, short term 310 310   Total current liabilities 10,530 9,410   Long-term liabilities:      Bonds payable 6,250 6,250   Total liabilities 16,780 15,660   Stockholders' equity:      Common stock 810 810      Additional paid-in capital 4,250 4,250        Total paid-in capital 5,060 5,060        Retained earnings 30,066 26,760   Total stockholders' equity 35,126 31,820   Total liabilities and stockholders' equity $ 51,906 $ 47,480

Explanation / Answer

1) Gross Margin Percentage = (Gross profit / Total Sales)*100 = (27,500/80,000)*100 = 34.3%

2) Net profit Margin Percentage = (Net profit / Total Sales)*100 = (3,630/80,000)*100 = 4.5%

3) Return on total Assets = (EBIT/ Total asets)*100 = (6,800/51,906)*100 = 13.1%

4) Return on Equity =   (Net income/  Total stockholders' equity)*100 = (3,630/35,126)*100=10.33%

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.