Comparative financial statements for Weller Corporation, a merchandising company

Question

Comparative financial statements for Weller Corporation, a merchandising company, for the fiscal year ending December 31 appear below. The company did not issue any new common stock during the year. A total of 500,000 shares of common stock were outstanding. The interest rate on the bond payable was 10%, the income tax rate was 40%, and the dividend per share of common stock was $.50. The market value of the company

Comparative financial statements for Weller Corporation, a merchandising company, for the fiscal year ending December 31 appear below. The company did not issue any new common stock during the year. A total of 500,000 shares of common stock were outstanding. The interest rate on the bond payable was 10%, the income tax rate was 40%, and the dividend per share of common stock was $.50. The market value of the company

Explanation / Answer

1. Times Interest Earned Ratio = EBIT / Interest expense

= 13400/810 = 16.543

2. Debt To equity RTio = Debt / equity

= 28420 / 48248 = 0.5890

3. Equity Multiplier

=Debt/Equity = 0.59
Since debt = assets minus equity
(Assets ? Equity)/Equity = 0.59
Assets ? Equity = 0.59 Equity
Assets = 1.59 equity
Assets/Equity = 1.59

Thanks

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