Evaluate the company financial position

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Reference no: EM132841843

Question - Horizontal Analysis of Comparative Statements Comparative Statement of Financial Position XYZ, Inc. December 31, 2019 and 2018

	2019	2018
Assets
Current Assets
Cash	70,392	68,250
Accounts receivable (net)	218,549	184,978
Inventory	223,242	197,097
Prepaid expenses	67,710	76,542
Total current assets	579,893	526,867
Noncurrent Assets
Plant, Property and Equipment (net)	90,503	110,987
Total Assets	670,396	637,854
Liabilities and Equity
Current Liabilities
Accounts payable	158,214	139,135
Bank loans and other payables	71,672	56,769
Current portion of notes payable	30,000	30,000
Total current liabilities	259,886	225,904
Long-term liabilities
Notes payable (11%)	139,000	169,000
Total liabilities	398,886	394,904
Equity
Preference shares, P8 dividend, P100 par	70,000	70,000
Ordinary shares, P1 par value	10,000	10,000
Additional paid-in capital	90,000	90,000
Total paid-in capital	170,000	170,000
Retained earnings	101,510	72,950
Total equity	271,510	242,950
Total liabilities and equity	670,396	637,854

XYZ, Inc. Comparative Income Statement For the Years Ended December 31, 2019 and 2018

	2019	2018
Sales revenue	2,000,000	1,801,802
Expenses
Cost of goods sold	1,472,000	1,309,910
Selling	248,000	230,000
Administrative	138,000	142,000
Total expenses	1,858,000	1,681,910
Operating income	142,000	119,892
Interest expense	27,907	29,270
Income before taxes	114,093	90,622
Income taxes (35%)	39933	31718
Net income	74,160	58,904
Dividends to preference shareholders	5,600	5,600
Net income remaining for ordinary shareholders	68,560	53,304
Dividends to ordinary shareholders	40,000	32,000
Net income added to retained earnings	28,560	21,304
Retained earnings, beg. of year	72,950	51,646
Retained earnings, end of year	101,510	72,950

Requirements -

a. Prepare horizontal analysis based on the above statements presented.

b. Evaluate the company's financial position and results of operation using the comparative statement analysis

i. Short-term solvency analysis

ii. Long-term financial position analysis

iii. Operating efficiency and profitability analysis

Reference no: EM132841843

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