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 800,000 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 $18. All of the company's sales are on account Weller Corporation Comparative Balance Sheet dollars in thousands) This Year Last Year Current assets Accounts receivable, net Inventory Prepaid expenses Total current assets Property and equipment $ 1,280 12.300 9.700 1.800 1,560 9,100 8,200 2,100 6,000 19,200 25,200 $50,280 6,000 19,000 25,000 545, 960 muildings and equipment, net Total property and equipment Total assets Liabilities and stockholders' Equity Current liabilities Accounts payable horued liabilities Notes payable, short term Total current liabilities Long-term liabilities Bonds payable - - $ 9,500 $ 8,300 700 10,400 9,300 5,000 3,000

Answer 1

1)	Gross Profit Margin = Gross Profit / Sales
	= $27000/79000
	=34.2 %
2)	Profit Margin = Net Income / Sales
	= $3540/79000
	=4.5 %
3)	Average Assets = (beginning Assets + ending Assets)/2
	= ( $45960+50280)/2
	= $ 48120
	Return On Assets = Net Income / Average Assets
	= $3540/48120
	=7.4 %
4)	Average Stockholders Equity = (beginning Stockholders Equity + ending Stockholders Equity)/2
	= ( $31660+34880)/2
	= $ 33270
	Return On Stockholders Equity = Net Income / Average Stockholders Equity
	= $3540/33270
	=10.64 %