Question

Comparative financial statements for Weller Corporation, a merchandising company, for the year ending December 31 appear...

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 850,000 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 $20.50. All of the company’s sales are on account.

Weller Corporation
Comparative Balance Sheet
(dollars in thousands)
This Year Last Year
Assets
Current assets:
Cash $ 1,810 $ 710
Accounts receivable, net 12,800 10,000
Inventory 9,950 8,400
Prepaid expenses 1,850 2,200
Total current assets 26,410 21,310
Property and equipment:
Land 6,500 6,500
Buildings and equipment, net 19,700 19,500
Total property and equipment 26,200 26,000
Total assets $ 52,610 $ 47,310
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 10,000 $ 8,550
Accrued liabilities 700 950
Notes payable, short term 350 350
Total current liabilities 11,050 9,850
Long-term liabilities:
Bonds payable 5,000 5,000
Total liabilities 16,050 14,850
Stockholders' equity:
Common stock 850 850
Additional paid-in capital 4,450 4,450
Total paid-in capital 5,300 5,300
Retained earnings 31,260 27,160
Total stockholders' equity 36,560 32,460
Total liabilities and stockholders' equity $ 52,610 $ 47,310
Weller Corporation
Comparative Income Statement and Reconciliation
(dollars in thousands)
This Year Last Year
Sales $ 84,000 $ 79,000
Cost of goods sold 54,500 50,500
Gross margin 29,500 28,500
Selling and administrative expenses:
Selling expenses 9,000 8,500
Administrative expenses 12,500 11,500
Total selling and administrative expenses 21,500 20,000
Net operating income 8,000 8,500
Interest expense 600 600
Net income before taxes 7,400 7,900
Income taxes 2,960 3,160
Net income 4,440 4,740
Dividends to common stockholders 340 680
Net income added to retained earnings 4,100 4,060
Beginning retained earnings 27,160 23,100
Ending retained earnings $ 31,260 $ 27,160

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 answer to 2 decimal places.)

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

Homework Answers

Answer #1

Ans:

Earning Per Share

= Net Income/No of Shares

=4440/(850)

5.22

Dividend Payout Ratio

= Divined Per share/ Earning Per Share

=0.40/5.22

7.66%

Dividend Yield Ratio

= Dividend Per Share/ Market Value Per Share

=0.40/20.50

=1.95%

Price Earning Ratio

= Market Price Per Share/ Earning Per share

=20.50/5.22

3.93

Book Value Per Share

= Total Shareholder's Equity/ No of Shares

=36560/(850)

43.01

Hope this helped ! Let me know in case of any queries.

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