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 970,000 shares of common stock were outstanding. The interest rate on the bond payable was 12%, the income tax rate was 40%, and the dividend per share of common stock was $0.75 last year and $0.40 this year. The market value of the company’s common stock at the end of the year was $26. All of the company’s sales are on account.
Weller Corporation Comparative Balance Sheet (dollars in thousands) |
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This Year | Last Year | |||||
Assets | ||||||
Current assets: | ||||||
Cash | $ | 3,302 | $ | 4,230 | ||
Accounts receivable, net | 16,100 | 9,100 | ||||
Inventory | 10,550 | 8,880 | ||||
Prepaid expenses | 1,970 | 2,440 | ||||
Total current assets | 31,922 | 24,650 | ||||
Property and equipment: | ||||||
Land | 7,700 | 7,700 | ||||
Buildings and equipment, net | 20,900 | 20,700 | ||||
Total property and equipment | 28,600 | 28,400 | ||||
Total assets | $ | 60,522 | $ | 53,050 | ||
Liabilities and Stockholders' Equity | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 11,200 | $ | 9,150 | ||
Accrued liabilities | 940 | 1,550 | ||||
Notes payable, short term | 470 | 470 | ||||
Total current liabilities | 12,610 | 11,170 | ||||
Long-term liabilities: | ||||||
Bonds payable | 7,500 | 7,500 | ||||
Total liabilities | 20,110 | 18,670 | ||||
Stockholders' equity: | ||||||
Common stock | 970 | 970 | ||||
Additional paid-in capital | 5,050 | 5,050 | ||||
Total paid-in capital | 6,020 | 6,020 | ||||
Retained earnings | 34,392 | 28,360 | ||||
Total stockholders' equity | 40,412 | 34,380 | ||||
Total liabilities and stockholders' equity | $ | 60,522 | $ | 53,050 | ||
Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) |
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This Year | Last Year | |||||
Sales | $ | 96,000 | $ | 91,000 | ||
Cost of goods sold | 60,500 | 56,500 | ||||
Gross margin | 35,500 | 34,500 | ||||
Selling and administrative expenses: | ||||||
Selling expenses | 10,200 | 9,700 | ||||
Administrative expenses | 13,700 | 12,700 | ||||
Total selling and administrative expenses | 23,900 | 22,400 | ||||
Net operating income | 11,600 | 12,100 | ||||
Interest expense | 900 | 900 | ||||
Net income before taxes | 10,700 | 11,200 | ||||
Income taxes | 4,280 | 4,480 | ||||
Net income | 6,420 | 6,720 | ||||
Dividends to common stockholders | 388 | 776 | ||||
Net income added to retained earnings | 6,032 | 5,944 | ||||
Beginning retained earnings | 28,360 | 22,416 | ||||
Ending retained earnings | $ | 34,392 | $ | 28,360 | ||
Required:
Compute the following financial data for this year:
1. Gross margin percentage. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)
2. Net profit margin percentage. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)
3. Return on total assets. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)
4. Return on equity.
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