Solution-Perform horizontal analysis on the balance sheet

Perform horizontal analysis on the balance sheet data

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Reference no: EM131589141

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		$

Reference no: EM131589141

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Perform horizontal analysis on the balance sheet data

Reference no: EM131589141

Reference no: EM131589141

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