Perform a Horizontal analysis for the year 2018 to year 2021 Income Statement and Balance sheet....

Transcribed Image Text:

Perform a Horizontal analysis for the year 2018 to year 2021 Income Statement and Balance sheet. • Perform a Vertical analysis (common size statements) for the year 2018 to year 2021 Income Statement and Balance sheet. o Always consider the first year as the base year for the horizontal analysis. • Provide your observations on the trends of the business, based on your horizontal and vertical analysis. • Assess the business' liquidity by using liquidity ratios. o is the company's position improving or deteriorating? Explain your answer. • Assess the business' profitability by using profitability ratios. o is the company's position improving or deteriorating? Explain your answer. Based on the above analysis (horizontal, vertical, and ratios), write a brief financial summary of the business, and explain any observed risks/weaknesses for the business. M14 1 2 3 4 5 6 Sales COGS Gross margin Operating expenses Lo Operating income 1 Interest expense 2 Income before taxes -6 17 3 Income taxes (40%) 4 Net income 5 18 B 19 20 21 Assets 22 Cash 23 A/R (net) 24 Inventory 25 Prepaid expenses 26 Total current assets 27 Capital assets (net) 28 Total assets 29 30 Liabilities & Shareholders' Equity 31 Accounts payable 32 Accrued expenses 33 Total current liabilities 34 Long-term debt 35 Total liabilities 36 37 Common stock ($0.50 par value) 38 Additional paid in capital 39 Retained eamings 40 Total equity 41 Total liabilities & equity 42 43 Closing Stock Price 44 45 46 $ D Patel's Fabrics Ltd. Comparative Income Statements 2018 $ 509,235 247,350 261,885 90,270 171,615 9,520 162,095 64,838 97,257 2018 $ 28,000 85,000 40,000 8,000 161,000 675,000 836,000 74,780 17,000 91,780 194,000 285,780 6,000 99,000 445,220 E 550,220 836,000 Patel's Fabrics Ltd. Comparative Balance Sheets 45.00 2018% 2019 $ 2018% 599,100 291,000 308,100 106,200 201,900 11,200 190,700 76,280 114,420 2019 $ 32,000 126,860 60,000 11,000 229,860 668,900 898,760 53,120 11,000 64,120 170,000 234,120 6,000 99,000 559,640 664,640 898,760 $ 38.00 2019% 2019% H 2020 $ 538,900 259,200 279,700 104,600 175,100 10,500 164,600 65,840 98,760 2020 $ 25,800 127,000 80,700 10,000 243,500 576,000 819,500 81,200 12,240 93,440 160,000 253,440 6,000 99,000 461,060 566,060 819,500 $ 35.00 2020% 2020% J 2021 $ 508,100 234,300 273,800 104,100 169,700 11,900 157,800 63,120 94,680 20,500 94,300 56,000 4,600 2021 $ 2021% 175,400 540,300 715,700 79,100 41,700 120,800 150,000 270,800 5,000 62,000 377,900 444,900 715,700 K $ 30.00 2021% Perform a Horizontal analysis for the year 2018 to year 2021 Income Statement and Balance sheet. • Perform a Vertical analysis (common size statements) for the year 2018 to year 2021 Income Statement and Balance sheet. o Always consider the first year as the base year for the horizontal analysis. • Provide your observations on the trends of the business, based on your horizontal and vertical analysis. • Assess the business' liquidity by using liquidity ratios. o is the company's position improving or deteriorating? Explain your answer. • Assess the business' profitability by using profitability ratios. o is the company's position improving or deteriorating? Explain your answer. Based on the above analysis (horizontal, vertical, and ratios), write a brief financial summary of the business, and explain any observed risks/weaknesses for the business. M14 1 2 3 4 5 6 Sales COGS Gross margin Operating expenses Lo Operating income 1 Interest expense 2 Income before taxes -6 17 3 Income taxes (40%) 4 Net income 5 18 B 19 20 21 Assets 22 Cash 23 A/R (net) 24 Inventory 25 Prepaid expenses 26 Total current assets 27 Capital assets (net) 28 Total assets 29 30 Liabilities & Shareholders' Equity 31 Accounts payable 32 Accrued expenses 33 Total current liabilities 34 Long-term debt 35 Total liabilities 36 37 Common stock ($0.50 par value) 38 Additional paid in capital 39 Retained eamings 40 Total equity 41 Total liabilities & equity 42 43 Closing Stock Price 44 45 46 $ D Patel's Fabrics Ltd. Comparative Income Statements 2018 $ 509,235 247,350 261,885 90,270 171,615 9,520 162,095 64,838 97,257 2018 $ 28,000 85,000 40,000 8,000 161,000 675,000 836,000 74,780 17,000 91,780 194,000 285,780 6,000 99,000 445,220 E 550,220 836,000 Patel's Fabrics Ltd. Comparative Balance Sheets 45.00 2018% 2019 $ 2018% 599,100 291,000 308,100 106,200 201,900 11,200 190,700 76,280 114,420 2019 $ 32,000 126,860 60,000 11,000 229,860 668,900 898,760 53,120 11,000 64,120 170,000 234,120 6,000 99,000 559,640 664,640 898,760 $ 38.00 2019% 2019% H 2020 $ 538,900 259,200 279,700 104,600 175,100 10,500 164,600 65,840 98,760 2020 $ 25,800 127,000 80,700 10,000 243,500 576,000 819,500 81,200 12,240 93,440 160,000 253,440 6,000 99,000 461,060 566,060 819,500 $ 35.00 2020% 2020% J 2021 $ 508,100 234,300 273,800 104,100 169,700 11,900 157,800 63,120 94,680 20,500 94,300 56,000 4,600 2021 $ 2021% 175,400 540,300 715,700 79,100 41,700 120,800 150,000 270,800 5,000 62,000 377,900 444,900 715,700 K $ 30.00 2021%

Answer rating: 100% (QA)

To perform the horizontal analysis we will calculate the percentage change from 2018 to 2021 for the income statement and balance sheet items We will ... View the full answer