11:18 AM ezto.mheducation.com Sprint? Comparaive financial statements for Weller

Question

11:18 AM ezto.mheducation.com Sprint? Comparaive 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 500,000 shares of common stock were outstanding. The interest rate on the bonds, which were sold at their face value, was 10%. 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 $23. All of the company's sales are on account Weller Corporation Comparative Balance Sheet 18300 18,000 100 ,100 7868 Comparative Income Statement and Reconcliation 54 20 33714 Required: Compute the following financial ratios for this year:

Explanation / Answer

1) Times Interest Earned = EBITDA / Total Interest Payable
=> 14,510 / 510 = 28.451

2) Debt-to-Equity Ratio = Total Debt / Total Equity
=> 29,800 / 47,680 = 0.625 or 62.5%

3) Equity Multiplier = Total Assets /Stockholder’s Equity
=> 77,480 / 47,680 = 1.625

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