Mike Sanders is considering the purchase of Kepler Company, a firm specializing in the manufacture of office supplies. To be able to assess the financial capabilities of the company, Mike has been given the company's financial statements for the two most recent years.

Required:
1. Compute the percentage change for each item in the balance sheet and income statement.
2. Comment on any significanttrends.

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Kepler Company Comparative Balance Sheets Accounts receivable, net nses Total current assets and equipment, net $1,100,000 Liabilities and Stockholders' Equity able Long-term bonds payable, 12% Total liabilities Common stock (100,000 shares) Total liabilities and equity $1,100,000 Kepler Company Comparative Income Statements This Year $950,000 (500,000) $450,000 (275,000 $175,000 (12,000) $163,000 (65,200) $97,800 (27,800) $ 70,000 Last Year $900,000 (490,000 $410,000 (260,000 $150,000 (18,000) $132,000 (52,800) $79,200 (19.200 $60,000 Sales Less Cost of goods sold Gross margin Less Selling and administrative expenses Operating income Less Interest expense Income before taxes Less Taxes Net income Less Dividends Net income, reta ined