Refer to exhibits C2.1 and C2.2 to use the data to evaluate current ratio, quick ratio, debt ratio, times interest earned, payables turnover, receivables turnover, inventory turnover, return on equity, return on sales, payables conversion period, receivables conversion period, inventory conversion period, and cash conversion cycle. Then comment on the financial strength or weakness of the corporation based on these ratios and cycles.

EXHIBIT C2.1 KF Income Statements: 20122013 Sales Cost of goods sold Gross margin Administrative Depreciation Earnings before interest and taxes Interest Earnings before taxes Taxes (at 40%) Net income 2012 $6,572,800 4,896,700 $ 1,676,100 1,281,700 72,000 $ 322,400 37,900 $ 284,500 113,800 $ 170,700 2013 $7,811,500 5,866,200 $1,945,300 1,492,200 86,000 $ 367,100 31,600 $ 335.500 134,200 $ 201,300 EXHIBIT C2.2 KF Balance Sheets: 2012-2013 2012 2013 Assets Cash $ 328,000 $ 244,000 Accounts receivable $1,004,200 $ 1,106,600 Inventory $ 765,400 $1,222,300 Other current $ 39,200 $ 46,800 Current assets $2,136,800 $ 2,619,700 Gross fixed assets $ 372,200 $ 493,600 Accumulated depreciation ($ 147,900) ($ 233,800) Net fixed assets $ 224,300 $ 259,800 Total assets $ 2,361,100 $2,879,500 Liabilities and Net Worth Accounts payable $ 345,700 $ 544,800 Notes payable $ 63,200 $ 63,200 Accruals $ 164,300 $ 156,100 Current liabilities $ 573,200 $ 764,100 Long-term debt $ 316,000 $ 252,800 Common stock (62,000 shares outstanding) $ 948,000 $ 1,137,600 Retained earnings $ 524,000 $ 725,000 Total liabilities and net worth $2,361,200 $2,879,500