Insert Table ChartText Shape Media Comment QUESTION 2 (35 POINTS) The following information is taken from the financial statements of Knights, Inc. From the balance sheet S 30,000 150,000 200,000 500,000 150,000 300,000 1,000,000 Cash Accounts recelvable Plant assets (net of accumulated depreciation) Current liabilities Total stockholders' equity Total assets From the income statement: $1,500,00 Net sales Cost of goods sold Operating expenses interest expense Income tax expense Net income 1,080,000 315,000 84,000 6,000 15,000 From the statement of cash flows: Net cash provided by operating activities (including interest paid of $79,000) Net cash used In investing activities Financing activities 40,000 (46,000) Amounts borrowed Repayment of amounts borrowed Dividends paid s 50,000 (14,000) (20,000 Net cash provided by financing activities 16 000 10 000 Net increase in cash during the year 611 Inset Pormat Arnge View Share Window Help Assignmen 5 Fall 2018 Chart Text Shape Media Comme Instructions a. Explain how the interest expense shown in the income statement could be $84,000, when the interest payment appearing in the statement of cash flows is only $79,000. b. Compute the following (round to one decimal place): i. Current ratio fi. Quick ratio fi. Working capital lv. Debt ratio c. Comment on these measurements and evaluate Knights, Inc.'s short-term debt- paying ability. d. Compute the following ratios (assume that the year-end amounts of totat assets and total stockholders' equity also represent the average amounts throughout the year). i. Return on assets if. Return on equity e. Comment on the company's performance under these measurements. Explain why the return on assets and return on equity are so different. Discuss (1) the apparent safety of long-term creditors' claims and (2) the prospects for Knights, Inc., continuing its dividend payments at the present level. f