Mike Sanders is considering the purchase of Kepler Company, a firm specializing in the manufacture of...

  

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Mike Sanders is considering the purchase of Kepler Company, a firm specializing in the manufacture of office supplies. To be able to assess the financial capabilities of the company, Mike has been given the company's financial statements for the 2 most recent years. Kepler Company Comparative Balance Sheets 'This Year Last Year Assets Current assets: Cash $ 50,000 $ 100,000 Accounts rececivable, net 300,000 150,000 Inventory Prepaid expenses 600,000 400,000 30,000 $ 680,000 25,000 Total current assets $ 975,000 Property and cquipment, net Total assets 125,000 $1,100,000 150,000 $ 830,000 Liabilities and Stockholders' Equity Current liabilities: $ 400,000 Accounts payable Short-term notes payable 200,000 $ 600,000 $ 290,000 60,000 $ 350,000 Total current liabilities Long term bonds payable, 12% Total liabilities 100,000 150,000 $ 700,000 $ 500,000 Stockholders' equity: Common stock (100,000 shares) Retained earnings Total liabilities and stockholders' cquity 200,000 200,000 200,000 $1,100,000 130,000 $ 830,000 Kepler Company Comparative Income Statements This Year Last Year Sales Less: Cost of goods sokld Gross margin Less: Selling and administrative cxpenses Operating income Less: Interest expense Income before taxes $950,000 $900,000 500,000 490,000 $450,000 $410,000 275,000 260,000 $175,000 $150,000 12,000 $163,000 18,000 $132,000 52,800 $ 79,200 Less: Income taxes 65,200 $ 97,800 27,800 S 70,000 Net income Less: Dividends 19,200 $ 60,000 Net income, retaincd Refer to the information for Kepler Company above. Required: Note: Round all percentages to one decimal place. 1. Compute the percentage change for each item in the balance sheet and income statement. 2. CONCEPTUAL CONNECTION Comment on any significant trends. Mike Sanders is considering the purchase of Kepler Company, a firm specializing in the manufacture of office supplies. To be able to assess the financial capabilities of the company, Mike has been given the company's financial statements for the 2 most recent years. Kepler Company Comparative Balance Sheets 'This Year Last Year Assets Current assets: Cash $ 50,000 $ 100,000 Accounts rececivable, net 300,000 150,000 Inventory Prepaid expenses 600,000 400,000 30,000 $ 680,000 25,000 Total current assets $ 975,000 Property and cquipment, net Total assets 125,000 $1,100,000 150,000 $ 830,000 Liabilities and Stockholders' Equity Current liabilities: $ 400,000 Accounts payable Short-term notes payable 200,000 $ 600,000 $ 290,000 60,000 $ 350,000 Total current liabilities Long term bonds payable, 12% Total liabilities 100,000 150,000 $ 700,000 $ 500,000 Stockholders' equity: Common stock (100,000 shares) Retained earnings Total liabilities and stockholders' cquity 200,000 200,000 200,000 $1,100,000 130,000 $ 830,000 Kepler Company Comparative Income Statements This Year Last Year Sales Less: Cost of goods sokld Gross margin Less: Selling and administrative cxpenses Operating income Less: Interest expense Income before taxes $950,000 $900,000 500,000 490,000 $450,000 $410,000 275,000 260,000 $175,000 $150,000 12,000 $163,000 18,000 $132,000 52,800 $ 79,200 Less: Income taxes 65,200 $ 97,800 27,800 S 70,000 Net income Less: Dividends 19,200 $ 60,000 Net income, retaincd Refer to the information for Kepler Company above. Required: Note: Round all percentages to one decimal place. 1. Compute the percentage change for each item in the balance sheet and income statement. 2. CONCEPTUAL CONNECTION Comment on any significant trends.