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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