ezto.mheducation.com UrbanSitter Chegg.com canmedia.mheducation.ca/college/o...

Question

ezto.mheducation.com UrbanSitter Chegg.com canmedia.mheducation.ca/college/o... 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 950,000 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 $26. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year Assets Current assets: $ 770 $1,810 15,900 9,000 10,450 8,800 1,950 2,400 Accounts receivable, net Prepaid expenses Total current assets 29,070 22,010 Property and equipment 7,500 7,500 20,700 20,500 Land Buildings and equipment, net Total property and equipment Total assets Liabilities and Stockholders' Equity 28,200 28,000 $57,270 $50,010 Current liabilities: Accounts payable Accrued liabilities $11,000 9,050 900 1,450 450 Notes payable, short term Total current liabilities Long-term liabilities: Bonds payable 12,350 10,950 5,000 5,000 17,350 15,950 Total liabilities Stockholders' equity: Common stock 950 4,950 4,950 950 Additional paid-in capital Total paid-in capital Retained earnings 5,900 5,900 34,020 28,160 Total stockholders' equity 39,920 34,060 Total liabilities and stockholders' equity $57,270 $50,010

Explanation / Answer

Return on total assets = Net operating income/Total assets =11000/57270= 19.2%

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