The King Mattress Company had the following operating results for 2018-2019. In addition, the company paid dividends in both 2018 and 2019 of $69,000 per year and made capital expenditures in both years of $30,000 per year. The company's stock price in 2018 was $8 and $7 in 2019. The industry average earnings multiple for the mattress industry was 9 in 2019 and the free cash flow and sales multiples were 18 and 1.5, respectively. The company is publicly owned and has 1,600,000 shares of outstanding stock at the end of 2019.

Balance Sheet, Dec 31,
	2019			2018
Cash	$	370,000		$	130,000
Accounts Receivable	$	380,000		$	430,000
Inventory	$	280,000		$	330,000
Total Current Assets	$	1,030,000		$	890,000
Long-lived Assets		1,380,000			1,400,000
Total Assets	$	2,410,000		$	2,290,000
Current Liabilities	$	230,000		$	330,000
Long-term Debt		630,000			530,000
Shareholder Equity		1,550,000			1,430,000
Total Debt and Equity	$	2,410,000		$	2,290,000

Income Statement, for year ended Dec 31,
	2019			2018
Sales	$	4,900,000		$	4,650,000
Cost of Sales		4,220,000			4,120,000
Gross Margin		680,000			530,000
Operating Expenses		365,000			415,000
Operating Income		315,000			115,000
Taxes		126,000			46,000
Net Income	$	189,000		$	69,000

Cash Flow From Operations	2019				2018
Net Income	$	189,000			$	69,000
Plus Depreciation Expense		50,000				50,000
+ Decrease (-inc) in AccRec. and Inv.		100,000				-
+ Increase (-dec) in Cur. Liabl.		(100,000	)			-
Cash Flow from Operations	$	239,000			$	119,000

The gross margin percentage for 2019 is (rounded):

Multiple Choice

• 11.4%

• 12.9%

• 13.9%

• 15.1%