2018 2017 Change 2018 Sales (all on credit) Cost of goods sold Gross margin Depreciation expense Other operating expenses 2017 $595,000 $536,000 (339,000) (278,000) 256,000 258,000 Current assets: Cash $65,470 $37,500 $27,970 Accounts receivable (net) 38,000 32,000 6,000 Inventory 44,000 42,000 2,000 Prepaid expenses 1,500 3,300 -1,800 37,000 51,000 126,000 105,000 Other current assets 2,100 3,200 -1.100 Total current assets 151,070 118,000 33,070 Total operating 163,000 156,000 expenses k Operating income 93,000 102,000 Long-term Investments 81,000 56,000 25,000 Other income ces Plant assets 307,000 257,000 50,000 (expenses) Interest expense (4,700) (3,500) Gain on sale of 6,100 4,300 investments Loss on sale of plant (3,300) (4,000) Less: accumulated depreciation Total plant assets Total assets (77,800) (51,000) 26,800 229,200 206,000 23,200 461,270 380,000 81,270 assets Total other income (expenses) (14,100) (3,200) Current liabilities: Income before income 91,100 98,800 Accounts payable $25,500 $26,000 $-500 taxes Income taxes expense (27.330) (29,640) Net income $63,770 $69,160 Accrued liabilities Income taxes payable 4,800 4,000 800 2,200 8,000 -5,800 Total current liabilities 32,500 38,000 5,500 R. Howard Inc. Statement of Retained Earnings For the year ended December 31, 2018 Long term liabilities: Notes Payable 236,000 175,000 61,000 Total liabilities 268,500 213,000 55,500 2018 2017 Ret. earnings, Jan. 1 Add: net income Deduct: Dividends Increase in retained earnings $29,000 63,770 69,160 (38,000) (40.160) $0 Stockholders' equity Common stock, $5 par 110,000 110,000 0 value Additional paid-in capital 28,000 28,000 0 25,770 29,000 Retained earnings 54,770 29,000 25,770 Ret earnings, Dec. 31 $54,770 $29,000 Total stockholders' equity 192,770 167,000 25,770 Total liabilities and $461,270 $380,000 $81,270 stockholders' equity Other information: Shares of common 22,000 22,000 stock outstanding Earnings per share $2.9 $3.14 Dividends per share $1.73 $1.83 Market price per $15 $12 share, common stock Cash Flows Horiz Analysis Horiz Analysis Vertic Analysis Vertic Analysis from Oper Inc St Bal St Inc St Bal Sheet Ratios Requirement Prepare the cash flows from operations section of R. Howard Inc.'s 2018 statement of cash flows using the indirect method. Enter items to be subtracted as negative values. R. Howard Inc. Cash Flows from Operating Activities Indirect Method For Year Ended December 31, 2018 Cash flows from operating activities Adjustments to reconcile net income to net cash provided by operations: Cash Flows from Oper Horiz Analysis Inc St Cash Flows from Oper Horiz Analysis Horiz Analysis Vertic Analysis Vertic Analysis Inc St Bal St Inc St Bal Sheet Ratios Requirement Prepare a vertical analysis on the partial income statements for 2017 and 2018. Enter decreases as negative amounts/percents. Sales Cost of goods sold Gross margin R. Howard Inc. PARTIAL INCOME STATEMENT (HORIZONTAL ANALYSIS) For the years ended December 31, 2017 and 2018 Expenses Depreciation expense Other operating expenses Total operating expenses Operating income Increase/decrease 2018 2017 Amount Percent $ 536,000 105,000 < Cash Flows from Oper Horiz Analysis Bal St > Cash Flows Horiz Analysis Horiz Analysis Vertic Analysis Vertic Analysis from Oper Requirement Inc St Bal St Inc St Bal Sheet Ratios Prepare a vertical analysis on the partial balance sheets for 2017 and 2018. Enter decreases as negative amounts/percents. Current assets: Cash Accounts receivable (net) Inventory Prepaid expenses Other current assets Total current assets Long-term investments Plant assets Less accumulated depreciation Total plant assets Total assets R. Howard Inc. Partial Balance Sheet (Horizontal Analysis) For the years ended December 31, 2018 and 2017 Increase/decrease 2018 2017 Amount Percent < Horiz Analysis Inc St Vertic Analysis Inc St es Cash Flows from Oper Requirement Horiz Analysis Horiz Analysis Vertic Analysis Vertic Analysis Inc St Bal St Inc St Bal Sheet Ratios Prepare a vertical analysis on the partial income statements for 2017 and 2018. Sales Cost of goods sold Gross margin Expenses Depreciation expense Other operating expenses Total operating expenses Operating income R. Howard Inc. Partial Income Statement (Vertical analysis) For the years ended December 31, 2018 and 2017 2018 % 2017 % $ 536,000 105,000 < Horiz Analysis Bal St Vertic Analysis Bal Sheet > Cash Flows Horiz Analysis Horiz Analysis Vertic Analysis Vertic Analysis from Oper Inc St Bal St Inc St Bal Sheet Ratios Requirement Prepare a vertical analysis on the partial balance sheet for 2017 and 2018. R. Howard Inc. Partial Balance Sheet (Vertical analysis) For the years ended December 31, 2018 and 2017 Current liabilities: Accounts payable Accrued liabilities Liabilities Income taxes payable Total current liabilities Notes payable Total liabilities Stockholders' Equity Common stock, $5 par Additional paid-in capital Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 2018 % 2017 % 236,000 175,000 < Vertic Analysis Inc St Ratios > Cash Flows from Oper Current ratio Acid-test ratio Inventory turnover Horiz Analysis Horiz Analysis Vertic Analysis Vertic Analysis Bal Sheet Inc St Bal St Inc St Ratios Days' sales in inventory Accounts receivable turnover Days' sales in receivables Total asset turnover Debt-to-equity ratio Profit margin Return on total assets: Return on common stockholders' equity Price/earnings ratio (P/E) Dividend yield Choose Numerator Choose Denominator < Vertic Analysis Bal Sheet Enter Numerator Value Enter Denominator Value Ratio