Homework SourseComparative financial statements for Weller Corporation a me
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 company’s common stock at the end of the year was $27. All of the company’s sales are on account.
Gross margin percentage. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)
Net profit margin percentage. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)
Return on total assets. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)
Return on equity. (Round your percentage answer to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)
| 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 | ||
Solution
Solution 1:
Gross margin percentage = Gross profit / Sales = $36,000 / $97,000 = 37.1%
Solution 2:
Net profit margin percentage = Net Income / Sales = $6,510 / $97,000 = 6.7%
Solution 3:
Return on total assets = Net operating income / Average total assets
Net operating income = $11,900
Average total assets = (Beginning total assets + Ending total assets) / 2 = ($62,148 + $54,570) / 2 = $58,359
Return on total assets = $11,900 / $58,359 = 20.4%
Solution 4:
Return on equity = Net Income / Average shareholder\'s equity
Net Income = $6,510
Average stockholder\'s equity = (Begining stockholder\'s equity + Ending stockholder\'s equity)/2
= ($40,658 + $34,540) / 2 = $37,599
Return on equity = $6,510 / $37,599 = 17.31%
