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 930,000 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 $24. 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 $ 4,038 4,140 15,70010,400 8,720 1,930 2,360 10,350 Total current assets 32,018 25,620 Property and equipment: Land Buildings and equipment, net 7,300 7,300 20,500 20,300 27,800 27,600 $59,818 $53,220 Total property and equipment Total assets Liabilities and Stockholders' Equity Current liabilities Accounts payable Accrued liabilities $10,800 $ 8,950 1,350 430 860 430 Notes payable, short term Total current liabilities Long-term liabilities 12,090 10,730 8,750 8,750 20,840 19,480 Bonds payable Total liabilities Stockholders' equity: 930 930 Common stock Additional paid-in capital 4,850 4,850 5,780 5,780 Total paid-in capital Retained earnings 33,19827,960 38,978 33,740 $59,818$53,220 Total stockholders' equity Total liabilities and stockholders' equity

Explanation / Answer

2 Price-earnings ratio = Market price/Earnings per share = 24/6.03= 3.98 4 Dividend yield ratio = Dividend/Market price = 0.4/24= 1.67% 5 Book value per share = 38978000/930000= 41.91

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