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.

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).)

Answer 1

To calculate the financial data for Weller Corporation, we need to use the information provided. The gross margin percentage is 37.5%, the net profit margin percentage is 6.7%, the return on total assets is 2.0%, and the return on equity is 7.5%.

To calculate the financial data for Weller Corporation, we need to use the information provided:

The gross margin percentage is calculated by dividing the gross margin by the net sales and multiplying by 100.

Gross margin is calculated by subtracting the cost of goods sold from the net sales.

In this case, the gross margin percentage is 37.5%.

The net profit margin percentage is calculated by dividing the net income by the net sales and multiplying by 100.

In this case, the net profit margin percentage is 6.7%.

The return on total assets is calculated by dividing the net income by the average total assets and multiplying by 100.

In this case, the return on total assets is 2.0%.

The return on equity is calculated by dividing the net income by the average stockholders' equity and multiplying by 100.

In this case, the return on equity is 7.5%.