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 870,000 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 this year was $21.50. 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 2,2423,130 10,100 8,480 2,240 29,26223 950 15,100 10,050 1,870 Total current assets Property and equipment: 6,700 19,900 26,600 $55,862 Land Buildings and equipment, net Total property and equipment Total assets Liabilities and Stockholders Equity Current liabilities: 6,700 19,700 26,400 $50,350 payable Accounts Accrued liabilities Notes payable, short term $10,200 8, 650 1,050 370 10,070 740 370 11,310 Total current liabilities Long-term liabilities: Bonds payable Total liabilities 7,500 18,810 7,500 17,570 Stockholders' equity: Common stock 870 4,550 5,420 870 paid-in capital Additional Total paid-in capital Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 4,550 31,632 $55,862 5,420 e 27,360 505232,780 $50,350 37 ,

Explanation / Answer

Solution 1:

Earning per share = Earning Available for Common stockholders / Outstanding Common Shares

EPS = 4,620,000 / 870,000 = $5.31

Solution 2:

Price Earning Ratio = Market Value Per share / Earning Per Share = $21.50 / 5.31 = 4.05 times

Solution 3:

Dividend Payout Ratio = Dividend per share / Earning per share = 0.40 / 5.31 = 7.53%

Solution 4:

Dividend Yield Ratio = Dividend per share / Current market Price per share = 0.40/21.50 = 1.86%

Solution 5:

Book Value Per Share = Total Common Shareholders' Equity / Outstanding common Shares = $37,052,000 / 870,000 = $42.59

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