FINANCIAL STATEMENT ANALYSIS EXERCISE

Instructions:

Prepare the 2011 and 2012 financial statements provided below for horizontal and vertical analysis.

Analyze the financial performance of Get Your Motor Runnin' using horizontal and vertical analysis.

Get Your Motor Runnin'
Comparative Balance Sheets
	2012	% of total vertical analysis	2011	% of total verticle analysis	% Change horizontal analysis
Assets
Current Assets
Cash	$198,456		$147,333
Accounts Receivable	4,000		5,000
Allowance for Uncollectible Accounts	(250)		80
Supplies	200		250
Inventory	35,000		32,000
Total current assets	237,406		184,663
Property, Plant, and Equipment
Equipment	60,000		15,000
Accumulated Depreciation - Equipment	(14,000)		(1,000)
Vehicles	35,000		35,000
Accumulated Depreciation - Vehicles	(4,800)		(2,400)
Building	684,375		684,375
Accumulated Depreciation - Building	(25,000)		(12,500)
Land	46,875		46,875
Land Improvements	23,750		23,750
Accumulated Depreciation - Land Improvements	(2,539)		(663)
Total PP&E	803,661		788,437
Total Assets	$1,041,067		$973,100

Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable	$20,000		$24,000
Wages Payable	1,000		500
Warranties Payable	750		500
Notes Payable	0		2,500
Total current liabilities	21,750		27,500
Long-term Liabilities
Bonds Payable	750,000		450,000
Mortgage Payable	0		300,000
Total long-term liabilities	750,000		750,000
Total liabilities	771,750		777,500
Stockholders' Equity
Common Stock	125,000		125,000
Paid-in capital in excess of par - common	25,000		25,000
Preferred Stock	40,000		20,000
Paid-in capital in excess of par - preferred	25,000		15,000
Less: Treasury Stock	(3,000)		(3,000)
Paid-in capital - treasury stock	500		500
Retained Earnings	56,817		13,100
Total stockholders' equity	269,317		195,600
Total liabilities and stockholders' equity	$1,041,067		$973,100

Get Your Motor Runnin'
Comparative Income Statements
	2012	% of total verticle analysis	2011	% of total verticle analysis	% Change horizontal analysis
Service Revenue	$93,693		$50,230
Sales	76,250		24,000
Cost of Goods Sold	(45,750)		(14,400)
Gross Margin	$124,193		$59,830
Operating Expenses:
Advertising Expense	$7,500		$5,000
Bad Debt Expense	330		0
Depreciation Expense - Equipment	13,000		5,667
Depreciation Expense - Vehicles	2,400		2,400
Depreciation Expense - Building	12,500		12,500
Depreciation Expense - Land Improvements	1,876		663
Wages Expense	22,870		10,500
Total Expenses	60,476		36,730
Net Income	$63,717		$23,100