value 0.00 points Comparative financial statements for Weller Corporation, a mer
ID: 2583251 • Letter: V
Question
value 0.00 points 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 840,000 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 $20. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year Assets Current assets Cash Accounts receivable, net Inventory Prepaid expenses $ 6,344 $ 6,400 9,300 8,360 1,840 2,180 12,700 9,900 Total current assets 30,784 26,240 Property and equipment: Land 6,400 6,400 Buildings and equipment, net Total property and equipment Total assets Liabilities and Stockholders' Equity 19,600 19,400 26,000 25,800 $56,784 $52,040 Current liabilities Accounts payable Accrued liabilities $ 9,900 $ 8,500 900 340 680 340 Notes payable, short term 10,920 9,740 10,000 10,000 20,920 19,740 Total current liabilities Long-term liabilities Bonds payable Total liabilities Stockholders' equity 840 4,400 840 Common stock Additional paid-in capital 4,400 Total paid-in capital Retained earnings 5,2405,240 30,624 27,060 35,864 32,300 $56,784 $52,040 Total stockholders' equity Total liabilities and stockholders' equityExplanation / Answer
Answer to Part 1.
Earning per share = Net income / Outstanding Shares
Earning per share = 3,900,000 / 840,000
Earning per share = $4.64
Answer to Part 2.
Price-Earning Ratio = Current Price per share / Earning per share
Price-Earning Ratio = 20 / 4.64
Price-Earning Ratio = 4.31 times
Answer to Part 3.
Dividend Payout ratio = Dividend per share / Earning per share
Dividend Payout ratio = 0.40 / 4.64
Dividend Payout ratio = 0.0862 or 8.62%
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