KARL CORPORATION COMPARITIVE BALANCE SHEETS DECEMBER 31, 2020 AND 2019 2020 2019 Current Assets: Cash and Cash Equivalent $ 560,000 $523,000 Marketable Securities 595,000 853,000 Notes Receivable 211,000 330,000 Accounts Receivable 471,000 353,000 Accrued Interest Receivable 594,000 639,000 Inventory 525,000 463,000 Prepaid Salaries 33,000 45,000 Prepaid Expenses 100,000 117,000 Total Current Assets $3,089,000 $3,323,000 Non Current Assets: Plant and Equipment 829,000 600,000 (net of accumulated depreciation) Total Assets $3,918,000 $3,923,000 Liabilities and Stockholders Equity Current liabilities: Notes Payable (Short Term) $779,000 $ 717,000 Accounts Payable 523,000 337,000 Interest Payable 234,000 334,000 Income Taxes Payable 150,000 165,000 Other Accrued Expenses payable 272,000 233,000 Total Current Liabilities $1,958,000 $1,786,000 Non Current Liabilities: Notes Payable (Long term) 140,000 0 Bonds Payable 900,000 800,000 Total Liabilities $2,998,000 $2,586,000 Stockholders Equity: Capital Stock $450,000 $400,000 Additional Paid-in-Capital 150,000 100,000 Retained Earnings 320,000 837,000 Total Stockholders Equity $920,000 $1,337,000 Total Liabilities and Equity $3,918,000 $3,923,000 a. Prepare and find KPIS (ratios) from the above balance sheet that short term investors can use to analyze company performance in both years. Common stock had a market value of $65 in 2020 and in 2019 it is $56, Dividends in common stock ($5 per share) $43,000 in 2020 and on 2019 its ($4 per share) $23,000, Dividends on preferred stock ($7 per share) $170,000 and in 2019 its ($10 per share) $89,000. Net income for the year 2020 amounted to $13,000, Net sales are $844,000, and cost of goods sold are $474,000, operating expense $403,000 including depreciation expense of $35,000, interest expense is $119,000 and tax expense is $107,000. Moreover, net income for the year 2019 amounted to $9,000, Net sales are $820,000, and cost of goods sold are $450,000, operating expense $395,000 including depreciation expense of $30,000, interest expense is $129,000 and tax expense is $115,000. Total Assets are $1,833,000 in 2018, stockholder equity is $547,000, common stock holder equity $160,000, inventory is $253,000 and accounts receivables are $200,000 and account payables are $90,000. 7 Marks b. Illustrate your findings in your own wording in minimum of 50 words for all ratios found on answer a by comparing both years of the company with industry average 5 Marks 1. Earnings Per Share: Industry Average: 8 2. Price Earning Per Ratio: Industry Average 15 3. Dividends Yield: Industry Average 7 4. Current Ratio: Industry Average 3 5. Acid Test Ratio: Industry Average 2 6. The Inventory Turnover Ratio: Industry Average 5 7. Account Receivable Turn Over Rate: Industry Average 7 8. Account Payable Turn Over Rate: Industry Average 7 9. Working Capital Cycle: Industry Average 80 10. Return on Equity Ratio: Industry Average 15 11. Return on Asset Ratio: Industry Average 10 12. Return on Common Stock Holder Equity: Industry Average 12 13. Debt Ratio: Industry Average 40 14. Times Interest Earned Ratio: Industry Average 8 15. Net Profit Margin: Industry Average 5 16. Capital Employed: Industry Average 10 on yearly basis 17. Return on Capital Employed: Industry Average 15.5 18. Net Income as a percentage of net sales: Industry Average 10 19. Operating Expense Ratio: Industry Average 15 20. Gross Profit Rate: Industry Average 4