Kate is very pleased with the results of the first year of operations for Kate's Cards. She ended the year on a high note, with the company's reputation for producing quality cards leading to more business than she can currently manage. Kate is considering expanding and bringing in several employees. In order to do this, she will need to find a larger location and also purchase more equipment. All this means additional financing. Kate has asked you to look at her year-end financial statements as if you were a banker considering giving Kate a loan. Comment on your findings and provide calculations to support your comments.

Transcribed Image Text:

Sales revenue. Cost of goods sold Gross profit. Operating expenses Wages Consulting. KATE'S CARDS Income Statement Year Ended August 31, 2019 Insurance Utilities. $185,000 106,000 79.000 18,000 11,850 1,200 2,400 14,400 3,250 Rent Depreciation.. Total operating expenses. Income from operations Interest expense.... Income before income tax Income tax expense. Net income 51,100 27,900 900 27,000 5,400 $ 21,600