Discuss the horizontal analysis and ratio analysis

Assignment Help Accounting Basics

Reference no: EM131848523

Question: Using the financial statements that you have prepared for Smith Manufacturing; prepare the following analyses in Excel:

• Horizontal analysis

• Vertical analysis

• Ratio analysis - calculate a minimum of five ratios

In addition to the numerical calculations, prepare a Word document that contains a brief written analysis of your findings. For example, is this company struggling, doing well, etc.

Smith Manufacturing, Inc.
Balance Sheet
As at Dec 31, 20XX
Assets	Prior YR	Current YR
Current Assets:
Cash	$ 15,000	$ 362,750
Accounts receivable	225,750	320,750
Less Allowance for doubtful Debts	(20,000)	(23,500)
Net Accounts Receivable	205,750	297,250
Prepaid Insurance	5,000	8,000
Inventory	80,000	40,000
Total Current Assets	$ 305,750	$ 708,000
Fixed Assets:
Land	$ 50,000	$ 50,000
Building	150,000	150,000
Less Accumulated Depreciation on Building	(7,500)	(15,000)
Net Building	142,500	135,000
Equipment	500,000	500,000
Less Accumulated Depreciation on Equipment	(50,000)	(100,000)
Net Equipment	450,000	400,000
Total Fixed Assets	642,500	585,000
Total Assets	$ 948,250	$ 1,293,000
Current Liabilities:
Accounts payable	$ 55,000	$ 105,000
Notes Payable (Short term )	50,000	125,000
Salaries Payable	5,000	2,000
Interest Payable	17,250	21,250
Total Current Liabilities	127,250	253,250
Long Term Liabilities:
Notes Payable (long term )	350,000	500,000
Total Long term Liabilities	350,000	500,000
Common stock	300,000	300,000
Retained Earnings	171,000	239,750
Total Equity	471,000	539,750
Total Liabilities and Equity	$ 948,250	$ 1,293,000

Reference no: EM131848523

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