2. Problem Condensed comparative financial statements for Woodstock Manufacturing Company appear below. Balance Sheet April 30 (in thousands of dollars) 2006 2005 2004 Assets: Current assets $ 1,700 $1,120 $1,544 Plant and equipment (net) 8,110 7,830 5,404 Other assets 1,004 695 772 Total assets $10,814 $9,645 $7,720 Liabilities and Stockholders' Equity: Current liabilities $ 950 $ 880 $ 772 Long-term liabilities 2,023 1,591 1,544 Capital stock ($10 par) 4,600 4,600 3,000 Paid-in capital in excess of par 770 770 386 Retained earnings 2,471 1,804 2,018 Total liabilities and stockholders' equity $10,814 $9,645 $7,720 Income Statement For the Year Ended April 30 (in thousands of dollars) 2006 $38,610 2005 $32,175 2004 $25,740 25,100 19,950 15,400 $13,510 $12,225 $10,340 7,700 6,565 5,148 4,270 4,175 3,861 $11,970 $10,740 $9,009 $ 1,485 $1,331 115 95 $ 1,425 $ 1,390 100 $1,231 655 645 541 $ 770 $ 745 $ 690 Net sales Cost of sales Gross profit Selling expenses Administrative expenses Total operating expenses Operating income Interest expense Net income before tax Income taxes $ 1,540 Net income Required: Perform a horizontal, common-size analysis of the balance sheet items, using 2004 as the base year. Also include a horizontal analysis of sales and net income. Comment on significant trends and relationships revealed by the computations. ANS: Assets: Current assets Plant and equipment (net) Other assets Total assets Liabilities and Stockholders' Equity: Current liabilities Long-term liabilities Capital stock ($10 par) Paid-in capital in excess of par Retained earnings Total liabilities and stockholders' equity Sales Net Income 2006 2005 2004 20