Blackboard Learn Smartwork5 for Principles of Comparative financial statements f
ID: 2583938 • Letter: B
Question
Blackboard Learn Smartwork5 for Principles of 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 800,000 shares of common stock were outstanding. The interest rato 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 $18. All of the company's sales are on account. Comparative Balance Sheet (dollars in thousands) This Year Last Year Assets Current assets: s 1,280 1,560 12,300 9,100 9,700 8,210 1,800 2,1 Cash Accounts receivable, net Prepaid expenses Total current assets Property and equipment 25,080 20,960 6,000 6,000 Land Buildings and equipment, net 9,200 19,000 25,200 25,000 $50,280 $45,960 Total property and equipment Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable Accrued liabilities 9,500 s 8,300 700 600 300 300 10,4009,300 5.000 5,000 15,400 14,300 Notes payable, short term Total current liabilities Long-term liabilities: Bonds payable Total liabilities Stockholders' equity Common stock 800 800 4,2004,200 Additional paid-in capital Total paid-in capital Retained earnings 5,0005,000 29,880 26,660 Total stockholders' equity 34,880 31,660 MacBook AirExplanation / Answer
1. Gross margin percentage = Gross margin / sales
= 27000 / 79000
= 34.2%
2. Net margin percentage = net income / sales
= 3540 / 79000
= 4.5%
3. Return on total assets = net income / average total assets
= 3540 / [(45960 + 50280) / 2 ]
= 3540 / 48120
= 7.4%
Note:- Average total assets = [Beginning Total assets + Ending Total assets] / 2
4. Return on equity = net income / average total shareholder's equity
= 3540 / [(31660 + 34880) / 2 ]
= 3540 / 33270
= 10.64%
Note:- Average total shareholder's equity = [Beginning total shareholder's equity + Ending total shareholder's equity] / 2
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