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 880,000 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 40% 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 $22. 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 Accounts receivable, net Inventory Prepaid expenses $ 3,508 15,200 10,100 1,880 $ 4,340 10,150 8,520 2,260 Total current assets 30,688 25,270 Property and equipment: Land Buildings and equipment, net 6,800 20,000 6,800 19,800 Total property and equipment 26,800 26,600 Total assets $57,488 $ 51,870 Liabilities and Stockholders' Equity Current liabilities: Accounts payable Accrued liabilities Notes payable, short term $10,300 760 380 $ 8,700 1,100 380 11,440 10,180 Total current liabilities Long-term liabilities: Bonds payable 8,750 8,750 Total liabilities 20,190 18,930 Stockholders' equity: Common stock Additional paid-in capital 880 4,600 880 4,600 Total paid-in capital Retained earnings 5,480 31,818 5,480 27,460 Total stockholders' equity 37,298 32,940 Total liabilities and stockholders' equity $57,488 $51,870

Answer 1

1.	Gross margin percentage = Gross margin / Sales = 31000 / 87000	35.6%
2.	Net profit margin percentage = Net income / Sales = 4710 / 87000	5.4%
3.	Average total assets = ( Beginning total assets + Ending total assets ) / 2 = ( 51870 + 57488 ) / 2	54679
	Return on total assets = Net income / Average total assets = 4710 / 54679	8.6%
4.	Average Stockholders' equity = ( Beginning stockholders' equity + Ending stockholders' equity ) / 2 = ( 32940 + 37298 ) / 2	35119
	Return on equity = Net income / Average stockholders' equity = 4710 / 35119	13.41%