Horizontal Analysis
A. Perform HORIZONTAL ANALYSIS on the Warrior Corp. Balance Sheet data below:
|
|
2008
|
2007
|
$ AMOUNT
|
% PERCENT
|
|
CURRENT ASSETS
|
$121,000
|
$100,000
|
$
|
%
|
|
ACCOUNTS RECEIVABLE
|
117,000
|
125,000
|
$
|
%
|
|
MERCHANDISE INVENTORY
|
70,000
|
85,000
|
$
|
%
|
|
CURRENT LIABILITIES
|
63,500
|
50,000
|
$
|
%
|
|
LONG-TERM LIABILITIES
|
100,000
|
100,000
|
$
|
%
|
|
COMMON STOCK
|
50,000
|
50,000
|
$
|
%
|
|
RETAINED EARNINGS
|
94,500
|
110,.000
|
$
|
%
|
B. Perform HORIZONTAL ANALYSIS on the Warrior Corp. Income Statement data below:
|
|
2008
|
2007
|
$ AMOUNT
|
% PERCENT
|
|
NET SALES REVENUE
|
$557,000
|
$500,000
|
$
|
%
|
|
COST OF GOODS SOLD
|
400,000
|
395,000
|
$
|
%
|
|
GROSS PROFIT
|
157,000
|
105,000
|
$
|
%
|
|
OPERATING EXPENSES
|
70,000
|
50,000
|
$
|
%
|
|
INCOME BEFORE TAX
|
87,000
|
55,000
|
$
|
%
|
|
INCOME TAXES
|
24,000
|
16,500
|
$
|
%
|
|
NET INCOME
|
$63,000
|
$38,500
|
$
|
%
|
C. What positive or negative changes contributed to the increase in Net Income?
|
|
2008
|
2007
|
2006
|
2005
|
|
NET SALES
|
$78,100
|
$75,000
|
$67,000
|
$55,000
|
|
COST OF GOODS SOLD
|
33,200
|
32,000
|
30,000
|
20,000
|
|
GROSS PROFIT
|
44.900
|
43,000
|
37,000
|
35,000
|
|
OPERATING EXPENSES
|
25,700
|
22,000
|
19,000
|
14,000
|
|
NET INCOME
|
19,200
|
21,000
|
18,000
|
21,000
|
Trend Analysis
A. Compete the table below using TREND ANALYSIS and using 2005 as the base year.
|
|
2008
|
2007
|
2006
|
2005
|
|
NET SALES
|
%
|
%
|
%
|
%
|
|
COST OF GOODS SOLD
|
%
|
%
|
%
|
%
|
|
GROSS PROFIT
|
%
|
%
|
%
|
%
|
|
OPERATING EXPENSES
|
%
|
%
|
%
|
%
|
|
NET INCOME
|
%
|
%
|
%
|
%
|
B. What can you learn from the trend analysis?
Vertical Analysis -
A. Perform VERTICAL ANALYSIS using Laker Co. Income Statement data:
|
|
2008
|
LAKER CO percentage %
|
INDUSTRY AVERAGE %
|
|
NET SALES
|
$557,000
|
|
100%
|
|
COST OF GOODS SOLD
|
400,000
|
|
68
|
|
GROSS PROFIT
|
157,000
|
|
32
|
|
OPERATING EXPENSES
|
70,000
|
|
14
|
|
NET INCOME BEFORE INCOME TAX
|
87,000
|
|
18
|
|
INCOME TAX EXPENSE
|
24,000
|
|
4
|
|
NET INCOME
|
63,000
|
|
14
|
B. How does LAKER CO. compare to the Industry averages?
Missing Amounts -
The following data is given for Clipper Co.
|
TOTAL CURRENT ASSETS
|
$36,000
|
|
ACCUMULATED DEPRECIATION
|
$ 5,000
|
|
TOTAL LIABILITIES
|
$52,000
|
|
DEBT RATIO
|
80%
|
|
CURRENT RATIO
|
1.20
|
A. Using the information above, compute the dollar amounts for the Balance Sheet below.
|
CURRENT ASSETS
|
|
$
|
|
PROPERTY, PLANT & EQUIPMENT
|
$
|
|
|
LESS ACCUMULATED DEPRECIATION
|
$
|
$
|
|
TOTAL ASSETS
|
|
$
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
$
|
|
LONG TERM LIABILITIES
|
|
$
|
|
STOCKHOLDERS' EQUITY
|
|
$
|
|
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY
|
|
$
|