Question

Weller Corporation Comparative Balance Sheet (dollars in thousands)
	This Year			Last Year
Assets
Current assets:
Cash	$	1,300		$	1,610
Accounts receivable, net		16,400			9,250
Inventory		10,700			9,000
Prepaid expenses		2,000			2,500
Total current assets		30,400			22,360
Property and equipment:
Land		8,000			8,000
Buildings and equipment, net		21,200			21,000
Total property and equipment		29,200			29,000
Total assets	$	59,600		$	51,360
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	11,500		$	9,300
Accrued liabilities		1,000			1,700
Notes payable, short term		500			500
Total current liabilities		13,000			11,500
Long-term liabilities:
Bonds payable		5,000			5,000
Total liabilities		18,000			16,500
Stockholders' equity:
Common stock		1,000			1,000
Additional paid-in capital		5,200			5,200
Total paid-in capital		6,200			6,200
Retained earnings		35,400			28,660
Total stockholders' equity		41,600			34,860
Total liabilities and stockholders' equity	$	59,600		$	51,360

Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands)
	This Year			Last Year
Sales	$	99,000		$	94,000
Cost of goods sold		62,000			58,000
Gross margin		37,000			36,000
Selling and administrative expenses:
Selling expenses		10,500			10,000
Administrative expenses		14,000			13,000
Total selling and administrative expenses		24,500			23,000
Net operating income		12,500			13,000
Interest expense		600			600
Net income before taxes		11,900			12,400
Income taxes		4,760			4,960
Net income		7,140			7,440
Dividends to common stockholders		400			800
Net income added to retained earnings		6,740			6,640
Beginning retained earnings		28,660			22,020
Ending retained earnings	$	35,400		$	28,660

Required:

Compute the following financial data for this year:

1. Earnings per share. (Round your answer to 2 decimal places.)

2. Price-earnings ratio. (Round your intermediate calculations and final answer to 2 decimal places.)

3. Dividend payout ratio. (Round your intermediate calculations and final answer to 2 decimal places.)

4. Dividend yield ratio. (Round your intermediate calculations and final answer to 2 decimal places.)

5. Book value per share. (Round your answer to 2 decimal places.)

Answer 1

Solution:

1. Earnings per share = Net income / Number of common shares outstanding

This Year

= $ 7,140 / 1,000

=$ 7.17

2. Price-earnings ratio = Price per share / Earnings per share

This Year

= $ 5.2 * / $ 7.17

=0.73 * $ 5,200 / 1,000 = $ 5.2

3. Dividend payout ratio= Total dividend / Net income

This Year

=$ 400 / $ 7,140

= 0.056

Or 5.6%

4. Dividend yield ratio = Dividend per share / Market value per share

This Year

= ($ 400 / 1000) / ($ 5,200 / 1,000 )

=$ 0.4/ $ 5.2 =0.077 Or 7.7 %

5. Book value per share = Total stockholders' equity / Number of common shares outstanding

This Year

= $ 41,600 / 1,000

=$41.6