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 910,000 shares of common stock were outstanding. The interest rate on the bonds. which were sold at their face value was 12% Then ome tax ate was %andthe dividend pers are ofcommon stock was so.40 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 Current assets: Cash Accounts receivable, net $ 1,506 $ 1,720 15,50010,300 10,2508,640 1,910 2,320 Prepaid expenses Total current assets 29,16622,980 Property and equipment: Land 7,100 7,100 20,30020,100 Buildings and equipment, net Total property and equipment Total assets Liabilities and Stockholders Equity 27 40027,200 $56,566 $50,180 Current liabilities: Accounts payable Accrued liabilities Notes payable, short term $10,600 8,850 820 1,260 410 410 11,830 10,510 6250 6,250 18,080 16,760 tal current liabilities Long-term liabilities: Bonds payable Total liabilities Stockholders equity 910 4,7504,750 910 Common stock Additional paid-in capital Total paid-in capital Retained earnings 5,6606,660 32,826 27,760 38,486 33,420 Total stockholders' equity Total liabilities and stockholders' equity $66,566 $50,180 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year $90,000 $85,000 Sales

Explanation / Answer

1. Earnings per share = earnings available to stockholders / total number of common stock shares

= 5430000 / 910000 = $5.97

2. price earnings ratio = Market price per share / earnings per share

= $24 / $5.97 = 4.02

3. Dividend payout ratio = Dividend paid per share / earnings per share

= $0.40 / $5.97 = 6.70%

4.Dividend yield Ratio = Cash dividends per share / Market value per share

= $0.40 / $24 = 1.67%

5.Book value per share = Stockholders equity / Total number of shares outstanding in the market

= 38486000 / 910000 = $42.29

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