Problem 13-23A Ratio analysis The following financial statements apply to Karl Company: Revenues Expenses Year 2 Year 1 $436,000 $360,000 Cost of goods sold 252,000 206,000 Selling expenses 42,000 38,000 General and administrative expenses 22,000 20,000 Interest expense 6,000 6,000 Income tax expense Total expenses Net income Assets 42,000 36,000 364,000 306,000 $ 72,000 $ 54,000 Net income Assets Current assets Cash $ 72,000 $ 54,000 $ 74,000 $ 84,000 Marketable securities 2,000 2,000 W Accounts receivable 70,000 64,000 Inventories 200,000 192,000 Prepaid expenses 6,000 4,000 Total current assets 352,000 346,000 Plant and equipment (net) 210,000 210,000 Intangibles 40,000 0 Total assets $602,000 $556,000 Liabilities and Stockholders' Equity Liabilities Current liabilities Liabilities and Stockholders' Equity Liabilities Current liabilities Accounts payable $ 80,000 $108,000 Other Total current liabilities Bonds payable 34,000 30,000 114,000 138,000 132,000 134,000 246,000 272,000 Total liabilities Stockholders' equity Common stock (100,000 shares) 230,000 230,000 126,000 54,000 Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 356,000 284,000 $602,000 $556,000 Required Calculate the following ratios for Year 1 and Year 2. When data limitations prohibit computing averages, use year-end balances calculations. Round computations to two decimal points. a. Net margin. b. Return on investment. c. Return on equity. d. Earnings per share. e. Price-earnings ratio (market prices at the end of Year 1 and Year 2 were $11.88 and $9.54, respectively). W f. Book value per share of common stock. g. Times interest earned. h. Working capital. i. Current ratio. j. Quick (acid-test) ratio. k. Accounts receivable turnover. 1. Inventory turnover. m. Debt-to-equity ratio. n. Debt-to-assets ratio. here to search