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 980,000 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 companyâs common stock at the end of the year was $27. All of the companyâs sales are on account.
Weller Corporation
Comparative Balance Sheet
(dollars in thousands) This Year Last Year Assets Current assets: Cash $ 4,568 $ 5,440 Accounts receivable, net 16,200 9,150 Inventory 10,600 8,920 Prepaid expenses 1,980 2,460 Total current assets 33,348 25,970 Property and equipment: Land 7,800 7,800 Buildings and equipment, net 21,000 20,800 Total property and equipment 28,800 28,600 Total assets $ 62,148 $ 54,570 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 11,300 $ 9,200 Accrued liabilities 960 1,600 Notes payable, short term 480 480 Total current liabilities 12,740 11,280 Long-term liabilities: Bonds payable 8,750 8,750 Total liabilities 21,490 20,030 Stockholders' equity: Common stock 980 980 Additional paid-in capital 5,100 5,100 Total paid-in capital 6,080 6,080 Retained earnings 34,578 28,460 Total stockholders' equity 40,658 34,540 Total liabilities and stockholders' equity $ 62,148 $ 54,570
Weller Corporation
Comparative Income Statement and Reconciliation
(dollars in thousands) This Year Last Year Sales $ 97,000 $ 92,000 Cost of goods sold 61,000 57,000 Gross margin 36,000 35,000 Selling and administrative expenses: Selling expenses 10,300 9,800 Administrative expenses 13,800 12,800 Total selling and administrative expenses 24,100 22,600 Net operating income 11,900 12,400 Interest expense 1,050 1,050 Net income before taxes 10,850 11,350 Income taxes 4,340 4,540 Net income 6,510 6,810 Dividends to common stockholders 392 784 Net income added to retained earnings 6,118 6,026 Beginning retained earnings 28,460 22,434 Ending retained earnings $ 34,578 $ 28,460
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. (Round your percentage answer to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)
1 Gross margin percentage ? % 2 Net profit margin percentage ? % 3 Return on total assets ? % 4 Return on equity ? %
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 980,000 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 companyâs common stock at the end of the year was $27. All of the companyâs sales are on account.
Weller Corporation Comparative Balance Sheet (dollars in thousands) | ||||||
This Year | Last Year | |||||
Assets | ||||||
Current assets: | ||||||
Cash | $ | 4,568 | $ | 5,440 | ||
Accounts receivable, net | 16,200 | 9,150 | ||||
Inventory | 10,600 | 8,920 | ||||
Prepaid expenses | 1,980 | 2,460 | ||||
Total current assets | 33,348 | 25,970 | ||||
Property and equipment: | ||||||
Land | 7,800 | 7,800 | ||||
Buildings and equipment, net | 21,000 | 20,800 | ||||
Total property and equipment | 28,800 | 28,600 | ||||
Total assets | $ | 62,148 | $ | 54,570 | ||
Liabilities and Stockholders' Equity | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 11,300 | $ | 9,200 | ||
Accrued liabilities | 960 | 1,600 | ||||
Notes payable, short term | 480 | 480 | ||||
Total current liabilities | 12,740 | 11,280 | ||||
Long-term liabilities: | ||||||
Bonds payable | 8,750 | 8,750 | ||||
Total liabilities | 21,490 | 20,030 | ||||
Stockholders' equity: | ||||||
Common stock | 980 | 980 | ||||
Additional paid-in capital | 5,100 | 5,100 | ||||
Total paid-in capital | 6,080 | 6,080 | ||||
Retained earnings | 34,578 | 28,460 | ||||
Total stockholders' equity | 40,658 | 34,540 | ||||
Total liabilities and stockholders' equity | $ | 62,148 | $ | 54,570 | ||
Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) | ||||||
This Year | Last Year | |||||
Sales | $ | 97,000 | $ | 92,000 | ||
Cost of goods sold | 61,000 | 57,000 | ||||
Gross margin | 36,000 | 35,000 | ||||
Selling and administrative expenses: | ||||||
Selling expenses | 10,300 | 9,800 | ||||
Administrative expenses | 13,800 | 12,800 | ||||
Total selling and administrative expenses | 24,100 | 22,600 | ||||
Net operating income | 11,900 | 12,400 | ||||
Interest expense | 1,050 | 1,050 | ||||
Net income before taxes | 10,850 | 11,350 | ||||
Income taxes | 4,340 | 4,540 | ||||
Net income | 6,510 | 6,810 | ||||
Dividends to common stockholders | 392 | 784 | ||||
Net income added to retained earnings | 6,118 | 6,026 | ||||
Beginning retained earnings | 28,460 | 22,434 | ||||
Ending retained earnings | $ | 34,578 | $ | 28,460 | ||
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. (Round your percentage answer to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)
1 | Gross margin percentage | ? | % |
2 | Net profit margin percentage | ? | % |
3 | Return on total assets | ? | % |
4 | Return on equity | ? | % |