Question

The below represents the comparative financial statements of Kamla Co Kamla Corporation Comparative Income Statement For the Years Ended December 31, 2016 and 2015 2016 2015 $1,228,000 $1,026,000 Net sales (all on account) Expenses: Cost of goods sold $812,000 $708,000 Selling and administrative 229,000 225,000 Interest expense 15,000 12,000 Income tax expense 22,000 32,400 Total expenses $1,088,400 $967,000 $139,600 $59,000 Net income Kamla Corporation Comparative Balance Sheet December 31, 2016 and 2015 Assets 2016 2015 Current assets: Cash $41,000 $37,600 Notes receivable 36,000 27,600 Accounts receivable (net) 171,600 148,800 Inventory 181,500 140,000 Total current assets 430,100 354,000 Property, plant, and equipment (net) 848,000 784,000 Total assets $1,278,100 $1,138,000 Liabilities and Stockholders' Equity

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Current Ratio Current Assets Current Liabilities $430,100 $295, 200 1.46 For every $ of Current Liabilities the company needs to pay it has $1.46 of Current Assets to utilize 2 $248,600 Acid-test ratio Quick Current Assets* Current Liabilities *Excludes Inventory 0.84 $295,200 For every $ of Current Liabilities the company needs to pay it has $0.84 of Quick Assets to utilize 3 Accounts receivable turnover $1,228,000 7.67 Average accounts receivable $160,200 The company has Receivable turnover an average of 7.67 times a year/period Inventory turnover Cost of Goods Sold Average inventory $812,000 $160,750 5.05 The company has Inventory turnover an average of 5.05 times a year/period 5 Profit Margin Net Profit Sales $139,600 $1,228,000 11.% The Company has 11.4% on each dollar of Sales as profit every period 6 Asset Turnover Ratio Sales Average Total Assets $1,228,000 $1,208,050 1.02 The company generates $1.02 of sales for each dollar it has in its Total Assets 7 Return on Total Assets Net Profit Average Total Assets $139,600 11.56% $1,208,050 The company has 11.56% on each dollar in its assets every period 8 Return on Common Stockholders Equity Ratio Net Profit Average Equity $139,600 $722,150 19.33% The company has 19.33% on each dollar by its common stockholders 9 Earning per share Earnings to Common Stockholders Number of Common stock $10.00 $139,600 70,000 $1.99 $1.99 The Company EPS is $1.99 10 Price to Earning multiple Market price per share Earning per share $30 $1.99 15.04 15.04 The company stock 15.04 times for the amount that the company on each shares 11 Payout Ratio Dividend payout Net Income $98, 100 $139,600 70% The company has 70% of its earnings in the form of Dividend payout Retained earnings opening balance Add: Net profit $401,400 $139,6001 $541,000 $442,900 $98,100 Less: Closing balance of Retained Earnings Dividend paid 12 Debt to Assets ratio Total Debt Total Assets $535,200 41.87% $1,278,100 41.87% of the company assets was provided by Debt 13 Times Interest earned EBIT* Interest *Net Profit + Income tax + Interest $187,000 $15,000 12.47 The company can cover its interest approximately 12.47 times per year/period