The following financial statements are for Waterloo Corporation:

WATERLOO CORPORATION Comparative Balance Sheets December 31, 20X5 and 20X4
	20X5	20X4
Assets
Current assets
Money	$ 12,250	$ 13,400
Accounts receivable (net)	19,500	25,900
inventories	39,500	35,900
Expense paid in advance	__4,750	__4,650
Total current assets	$ 73,000	$ 71,150
Property, plant and equipment
Buildings (net)	$ 103,750	$ 102,150
Equipment (net)	29,500	30,900
Vehicles (net)	33,000	40,900
Total property, plant and equipment	$ 164,250	$ 172,150
Brands (net)	__$ 15,750	__$ 3,400
total assets	$ 251,000	$ 250,900
Liabilities and Equity
current liabilities
Accounts payable	$ 50,000	$ 70,900
Pay	14,500	40,900
federal taxes to pay	__3,500	__25,900
Total current liabilities	$ 66,000	$ 135,900
long term debt	__$ 51.000	__$ 25,900
Full responsibility	$ 116,000	$ 160,900
stockholders' equity
Common shares, $10 a par	$ 26,000	$ 25,900
Retained earnings	__111,000	__65,900
Equity of total shareholders	$ 136,000	$ 90,900
Total Liabilities and Stockholders' Equity	$ 251,000	$ 250,900

WATERLOO CORPORATION Comparative Statements of Income For the Years Ended December 31, 20X5 and 20X4
	20X5	20X4
net sales	$ 575,000	$510,000
cost of goods sold	__330,000	__250,000
Gross profit	$ 220,000	$250,000
operating expense	__132,500	__100,000
Income before interest and taxes	$ 87,500	$150,000
Interest expenses	__12,500	__3,000
income before taxes	$ 75,000	$147,000
Income from tax expenses	__30,000	__58,800
Net Income	$ 45,000	$ 88,200

Instructions

Prepare a horizontal analysis of the balance sheet, showing changes in dollars and percentages. 

Prepare a vertical analysis of the income statement by relating each item to net sales.

Briefly comment on the results of your analysis.

Answer rating: 100% (QA)

Horizontal Analysis of the Balance Sheet Changes in Dollars Money Dollar Change 12250 13400 1150 Accounts Receivable net Dollar Change 19500 25900 6400 Inventories Dollar Change 39500 35900 3600 Expen... View the full answer