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 800,000 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 40s 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. nts Weller Corporation8 Conparative Balance Sheet (dollars in thousands) eBook This Year Last Year Current assetsi Cash Nccounts receivable, net Inventory Prepaid expenses 1,280 s 1,560 9,100 8,200 12,300 9,700 25 080 20960 6,000 6,000 19.20019.000 25.200 25 000 550,280 $45,960 Total current assets Pzoperty and equipment Print Buildinga and equipment, net Total property and equippent Total ansets Liabilities and stockholders Equity Carrent 1iabilities Accoasts payable Acerued 1tabi1eties 9,500 s 8.300 T00 600 Notes payable, short ter Total curxet Aiabilties Long-tern 1Eabilitiea a 10.400 9 300 Bonda payable total liabilities 400 100 stockholdars quE Conson atock 800 800 Addit lone peid-in capital Total paid-in capita Retained eatninga Total stoakholdezei Total 11abilitsen and stockhoidere94552 ,000 $50,280 545.960 rey.maet.S Next >

Explanation / Answer

= 6,500 / 600

Times Interest earned ratio = 10.83 Times

= Total Liabilities / Shareholder’s fund

= 15,400 / 34,880

Debt equity ratio = 0.44:1

= 50,280 / 34,880

Equity Multiplier = 1.44

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