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 820,000 shares of common stock were outstanding. The interest rate on the bonds, which were sold at their face value, was 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. All of the company’s sales are on account.

Earnings per share.

Price-earnings ratio.

Dividend payout ratio.

Dividend yield ratio.

Book value per share

Weller Corporation
Comparative Balance Sheet
(dollars in thousands) This Year Last Year   Assets   Current assets:      Cash $ 3,812 $ 3,980      Accounts receivable, net 12,500 9,200      Inventory 9,800 8,280      Prepaid expenses 1,820 2,140   Total current assets 27,932 23,600   Property and equipment:      Land 6,200 6,200      Buildings and equipment, net 19,400 19,200   Total property and equipment 25,600 25,400   Total assets $ 53,532 $ 49,000   Liabilities and Stockholders' Equity   Current liabilities:      Accounts payable $ 9,700 $ 8,400      Accrued liabilities 640 800      Notes payable, short term 320 320   Total current liabilities 10,660 9,520   Long-term liabilities:      Bonds payable 7,500 7,500   Total liabilities 18,160 17,020   Stockholders' equity:      Common stock 820 820      Additional paid-in capital 4,300 4,300        Total paid-in capital 5,120 5,120        Retained earnings 30,252 26,860   Total stockholders' equity 35,372 31,980   Total liabilities and stockholders' equity $ 53,532 $ 49,000

Explanation / Answer

Earning Per Share a Net Income after tax but before dividend 3720000 b Number of common stocks 820000 c Earning Per Share =a/b 4.54 Price Earning Ratio Earning Per Share 4.54 b Price per share 19 c PE Ratio=b/a 4.19 Dividend Payout Ratio a Net Income after tax but before dividend 3720000 b Dividend Paid 328000 c DP Ratio = b/a 0.09 Dividend Yield ratio a Dividend paid per share 0.4 b Face Value per share 1 The total value of common stocks is 820000 and the number of common stock is 820000 hence, the face value is $ 1 per share c DY Ratio= a/b 0.4 Book Value per Share a Retained Earnings 30252000 b Common Stock 820000 c Book Value per share -= a/b 36.89

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