Assignment 1: Horizontal Analysis

Data Table Horizontal AnalysisItem

2014

2013

2012

2011

2010

Net Sales

$980,000

$900,000

$650,000

$550,000

$500,000

Cost of Goods Sold

700,000

640,000

480,000

420,000

400,000

Gross Profit

$280,000

$260,000

$170,000

$130,000

$100,000

Instructions

Using horizontal analysis and 2010 as the base year, calculate the trend percentages for net sales, cost of goods sold, and gross profit. Explain whether the trends are favourable or unfavourable for each item.

Assignment 2: Horizontal and Vertical Analysis

Using the following selected items from the comparative balance sheet of Cantley Company, illustrate horizontal and vertical analysis. Use a separate sheet for each type of analysis. What conclusions can you draw?

Hint* The horizontal analysis will compare 2015 to the base year 2014. The vertical analysis will compare Accounts Receivable and Inventory to Total Assets for each year.

Comparative Balance Sheet - Horizontal and Vertical AnalysisDecember 31, 2015

December 31, 2014

Accounts Receivable$ 960,000

$ 600,000

Inventory920,000

750,000

Total Assets4,000,000

3,000,000

Assignment 3: Comparative Balance Sheet - Horizontal and Vertical Analysis

Assets

2014

2013

Current Assets$ 322

$280

Capital Assets678

520

Total Assets$1,000

$800

Liabilities and Shareholders' EquityCurrent Liabilities$ 180

$120

Long-term Debt200

160

Common Shares320

320

Retained Earnings300

200

Total Liabilities and Shareholders' Equity$1,000

$800

Instructions

(a) Using horizontal analysis, show the percentage change for each balance sheet item, using 2013 as a base year.

(b) Using vertical analysis, make a common size comparative balance sheet for each year.