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 950,000 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 this year was $26. All of the company's sales are on account. weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year Assets Current assets: $ 770 1,810 9,000 8,800 2,400 Cash Accounts receivable, net Inventory Prepaid expenses 10,450 1,950 29,070 Total current assets Property and equipment: 552079 22,01 Land 7,500 20, 500 28,000 $57,270 $50,010 7,500 20,700 28,200 Buildings and equipment, net Total property and equipment Total assets Liabilities and Stockholders' Equity Current liabilities: $11,0009,050 Accounts payable Accrued liabilities Notes payable, short term 900 450 450 10,950 Total current 1iabilities Long-term liabilities: Bonds payable 5,000 15,950 7,350 Total liabilities Stockholders' equity: Common stock Additional paid-in capital Total paid-in capital Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 4,950 5,900 34,020 39,920 4,950 5,900 28,160 34,060 $57,270 $50,010 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year Sales Cost of goods sold Gross margin Selling and administrative expenses: $94,000 59,500 34,500 $89,000 55, 500 33, 500 Selling expenses Administrative expenses 10,000 13, 500 23, 500 12, 500 22,000 Total selling and administrative expenses

Answer 1

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Anwers are highlighted in yellow: Ignore the % sign for input as already given: Solution: 1) Gross Margin Percentage Ratio Formula = Gross Margin / Sales (34500)/(94000) 36.7% 2) Net Profit Margin Percentage Ratio Formula Net Income/Sales (6240)/(94000) 6.6% 3) Return on Total Assets (ROA Formula = Net Income / Average Total Assets (6240)/(57270+50010)/2 11.6% 4) Return on Equity Formula Net Income/Average Stockholders' Equity (6240)/(39920+34060)/2 16.87%