AP-19A LO 2 The following financial statements are taken from the records of Abaya Inc. Abaya Inc. Balance Sheet As at December 31 2018 2017 2016 Current Assets Cash Accounts Receivable Merchandise Inventory Short-Term Investments Total Current Assets Noncurrent Assets Total Assets Current Liabilities Long-Term Liabilities Total Liabilities Stockholders' Equity Total Liabilities and Stockholders' Equity $315,000 140,000 411,000 115,000 981,000 356,000 $1,337,000 214,000 22,000 236,000 1,101,000 $1,337,000 $325,000 198,000 397,000 100,000 1,020,000 250,000 $1,270,000 265,000 150,000 415,000 855,000 $1,270,000 $210,000 92,000 428,000 100,000 830,000 403,000 $1,233,000 90,000 100,000 190,000 1,043,000 $1,233,000 796 Financial Statement Analysis Abaya Inc. Income Statement For the Year Ended December 31 2018 $701,000 379.000 322,000 2017 $689,000 396,000 293,000 2016 $514,000 385,000 129,000 16,100 Sales Cost of Goods Sold Gross Profit Operating Expenses Administrative Expense Selling Expense Total Operating Expenses Other Income and Expenses Interest Expense Income before Income Tax Expense Income Tax Expense Net Income 28,050 65,000 93,050 15,780 34,000 49,780 30,000 46,100 8,500 18,600 210.350 63.105 74.400 12,600 230,620 69,186 5161434 22,320 $52.000 $147.245 Required a) Use horizontal analysis techniques to compare the changes between the 2018 and 2017 balance sheet items. Abaya Inc. Balance Sheet As at December 31 2018 2017 $ Change % Change Current Assets Cash Accounts Receivable Merchandise Inventory Short-Term Investments Total Current Assets $315,000 140,000 411,000 115.000 981,000 $325,000 198,000 397,000 100.000 1,020,000 356,000 250,000 Noncurrent Assets $1.337.000 $1.270,000 Total Assets Current Liabilities Long-Term Liabilities Total Liabilities 214,000 22.000 236,000 265,000 150,000 415,000 1.101.000 855.000 Stockholders' Equity $1,337000 $1,270,000 Total Liabilities and Stockholders'Equity Financial Statemen Chapter 20 Song 2016 as a base year, provide a horizontal analysis of sales, gross profit, operating expenses and net in 2018 2017 2016 Sales Gross Profit Operating Expenses Net Income C) Perform a vertical analysis of income statement for 2018, 2017 and 2016 and state all of the income statement as a percentage of net sales. Abaya Inc. Income Statement For the Year Ended December 31 2018 2017 Sales Cost of Goods Sold Gross Profit 2016 Operating Expenses Administrative Expense Selling Expense Total Operating Expenses Other Income and Expenses Interest Expense Income before Income Tax Expense Income Tax Expense Net Income