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 500,000 shares of common stock were outstanding. The interest rate on the bond payable was 10%, the income tax rate was 40%, and the dividend per share of common stoc va last year and $0.40 this year. The market value of the company's common stock at the end of this year was $26. All of the company's sales are on account.

Explanation / Answer

Answer:

Times interest earned ratio = Net Operating income / Interest expense = 18800/990 = 18.99

Debt to Equity ratio = Total Liabilities / Total Stockholders equity = 29690 / 49957 = 0.594

Equity Multiplier = Total Assets / Total Stockholders equity = 79647 / 49957 = 1.59

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