Comparative financial statements for Weller Corporation, a merchandising company

Question

Comparative financial statements for Weller Corporation, a merchandising company, for the year ending December 31 appear below. The company did not issue any new common stock during the year. A total of 830,000 shares of common stock were outstanding. The interest rate on the bonds, which were sold at their face value, wa:s 12%. The income tax rate was 40% and the dividend per share of common stock was $0.40 this year. The market value of the company's common stock at the end of the year was $19.50. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year Assets Current assets: Cash Accounts receivable, net Inventory Prepaid expenses 5,078 $ 5,190 9,250 8,320 2,160 12,600 9,850 1,830 Total current assets 29,35824,920 Property and equipment: Land Buildings and equipment, net 6,300 6,300 19,500 19,300 25,80025,600 $ 55,158 $50,520 Total property and equipment lotal assets

Explanation / Answer

Solution:

1)

Earnings Per Share (EPS) = Net Income available to common stockholders / Number of Shares Outstanding

= 3,810,000 / 830,000 Shares

= $4.59

2)

Price Earnings Ratio = Market Price Per Share / Earnings Per Share

= $19.50 / 4.59

= 4.25

3)

Dividend Payout Ratio = Dividend Per Share / Earnings Per Share x 100

= $0.40 / 4.59 x 100

= 8.71%

4)

Dividend Yield Ratio = Dividend Per Share / market Price per share x 100

= $0.40 / 19.50 x 100

= 2.05%

5)

Book Value per share = Net Assets / Number of Outstanding Shares

Net Assets = Total Stockholders Equity = Total Assets – Total Liabilities = $35,618,000

Book Value Per Share $35,618,000 / 830,000 Shares

= $42.91

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