P15-3, P. 738 Book Finncial Accounting Ed. 6 Condensed balance sheet and income statement data for Kersenbrock Corporation appear below. KERSENBROCK CORPORATION Balance Sheets December 31 2009 2008 2007 Cash$ 25,000 $ 20,000 $ 18,000 Receivables (net) 50,000 45,000 48,000 Other current assets 90,000 95,000 64,000 Investments 75,000 70,000 45,000 Plant and equipment (net) 400,000 370,000 358,000 $640,000 $600,000 $533,000 Current liabilities $ 75,000 $ 80,000 $ 70,000 Long-term debt 80,000 85,000 50,000 Common stock, $10 par 340,000 310,000 300,000 Retained earnings 145,000 125,000 113,000 $640,000 $600,000 $533,000 KERSENBROCK CORPORATION Income Statement For the Year Ended December 31 2009 2008 Sales $740,000 $700,000 Less: Sales returns and allowances 40,000 50,000 Net sales 700,000 650,000 Cost of goods sold 420,000 400,000 Gross profit 280,000 250,000 Operating expenses (including income taxes) 235,000 220,000 Net income $ 45,000 $ 30,000 Additional information: 1. The market price of Kersenbrocks common stock was $4.00, $5.00, and $8.00 for 2007, 2008, and 2009, respectively. 2. All dividends were paid in cash. Instructions (a) Compute the following ratios for 2008 and 2009. (1) Profit margin. (2) Asset turnover. (3) Earnings per share. (Weighted-average-common shares in 2009 were 32,000 and in 2008 were 31,000.) (4) Price-earnings. (5) Payout. (6) Debt to total assets. (b) Based on the ratios calculated, discuss briefly the improvement or lack thereof in financial position and operating results from 2008 to 2009 of Kersenbrock Corporation