Comparative finarcial statements for Weller Corporation, a December 31 appear be

Question

Comparative finarcial statements for Weller Corporation, a December 31 appear below The company did not issue any new common stock during the year, A total of 500,000 shares of cormmon stock were outstanding. The interest rate on the bonds, which were sold at ther face value, was 10%. The inoome 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 e year was $21. Al of the company's sales are an account company, for the year ending Weller Corporation Comparative Balance Sheet dolars in thousands This Year Last Year Current assets S 1,200 1,390 9,600 7,400 12.200 12.400 Accounts receivable, net Prepaid expenses 710 otal current assets 23,710 21,780 Property and equipment Land 10,000 10,000 Buldings and equipment,net Total propeny and equipment Total assets Liabilities and Stockholders" Equity 50,148 39,949 60.148 49,949 S83,858 $71,708 Current lablites Accounts payable Accnued iabiities Notes payable, short serm 19,400 S18,500 800 1,080 20.480 19,550 8.600 8,600 28,080 28.150 Total current liablities Long term lisblites: Bands payabie Total lablnes Stockholders' equity 2,000 Common stock Addisonal paid-n capital 2,000 4,000 6,000 Total paid-in capital Retained earnings 6,000 48,778 37,559 4.7T8 43,5e S83,858 $71,708 Total stockho ders equity Total lablnies and stockhokders'equy Weller Corporation Comparative Income Statement and Reconcliatiorn (dolars in theusands) Sales Cost of goods sold This Year Last Year 72,000 $65.000 33,000 35,000 Gross margin 39,000 30,000 seling and administrative Selling expenses Admiristrative expenses enses 1,400 10,800 7.000 6,800 8,40017.400 20,600 2,600 Total seling and administrative experses Net operating income Interest expense 60 060 Net income before taxes 9.740 ,740 ,898 4,896 1,844 7,044 Net incorne Dividends to common stockholders 625 625 11,219 6,419 Net income added o retained eamings Beginning retained earnings 37,559 3,140 Erdirg retained carnings 48,778 $37,558 Required Compute the folowirg francial ratios for this year 1. Times imerest earned ratio. (Round your answer to 1 decimal place.) Times interest eamed ratio 2. Debi-to-equity ratio. (Round your answer to 2 decimal places.) 3. Equity musplier. (Round your answer to 2 decimal place8.) Equity multipier

Explanation / Answer

1. time interest earned ratio = EBIT / interest = 20600/860 = 23.95

2. debt-to-equity ratio = total liabilities / equity = 29080/54778 = 0.53

3. equity multiplier = total assets / equity = 83858/54778 = 1.53

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