Below is comparative information on two companies in the same industry:

For the Year Ended December 31st 2018	Kat Company	Nat Company
Sales (all on account)    Cost of Goods Sold Operating Expenses Interest Expenses Income tax Expense Net Income	$4,550,000 3,115,000 780,000 105,000 140,000   $410,000	$7,450,000 5,270,000 1.060,000 280,000 160,000     $480,000

	Kat Company		Nat Company
As at December 31st	2018	2017	2018	2017
Cash Accounts Receivable Inventory   Equipment (net) Total Assets	$190,000 460,000 550,000 4,010,000 $5,210,000	$150,000 380,000 490,0003,570,000 $4,590,000	$210,000 770,000 660,000 6,930,000 $8,570,000	$190,000 510,000 620,000   6,580,000 $7,900,000
Current Liabilities Long Term Liabilities Common Stock Retained Earnings Total Liabilities and Equity	$780,000 2,150,000 140,000   2,140,000 $5,210,000	$610,000 1,990,000 140,000   1,850,000 $4,590,000	$910,000 4,650,000 190,000 2,820,000 $8,570,000	$820,000 4,380,000 190,000   2,510,000 $7,900,000
Common Shares outstanding: Share price on December 31st  2018:	103,000 ordinary shares outstanding for the year. $85.00		235,000 ordinary shares outstanding for the year. $40.00

Required:

A. Explain the difference between the Retained Earnings balance from 2017 to 2018 for both companies.

B. What percentage of earnings were paid out as dividends in fiscal 2018 for each company?

C. Calculate and explain each company’s long-term solvency (risk) for 2018 and 2017.

D. Calculate and explain each company’s success in its use of its assets.

E. Calculate and explain each company’s management of inventory.

F. Using the above ratios, explain which company is a better one to invest in and why. Using the ratios you derived, justify and explain your recommendation.