Horizontal Analysis of Comparative Statements

Music Lover, Inc. Comparative Income Statement For the Years Ended December 31, 2019 and 2018 2019 2018 Sales revenue 2,000,000 1,801,802 Expenses Cost of goods sold 1,472,000 1,309,910 Selling 248,000 230,000 Administrative 138,000 142,000 Total expenses 1,858,000 1,681,910 Operating income 142,000 119,892 Interest expense 27,907 29,270 Income before taxes 114,093 90,622 Income taxes (35%) 39933 31718 Net income 74,160 58,904 Dividends to preference shareholders 5,600 5,600 Net income remaining for ordinary shareholders 68,560 53-304 Dividends to ordinary shareholders 40,000 32,000 Net income added to retained earnings 28,560 21,304 Retained earnings, beg. of year 72,950 51,646 Retained earnings, end of year 101,510 72,950Music Lover, Inc Comparative Statement of Financial Position December 31 2019 and 2018 Increase( Decrease) 2019 2010 Amount PETen ABLETE Current Asset 70,392 68,250 Amounts receivable (net 213,549 184.978 Inventory 213 242 197097 Prepaid expenses 67,710 76, 542 Total current assets 579 893 526867 Noncurrent Assets Plant, Propertyand Equipment ( net) 90,503 110947 Total Assets 670.346 637854 Liabilities and Equity Current Liabilities Amounts payable 153,214 139 135 Bankloans and other payables 71,672 55, 759 Current portion of notes payable 30,000 30,000 Total current labinie 259,8 86 325 904 Long-termlabirie Notes payable (11#) 139,000 159000 Total labilities 304836 394 904 Equity Preference shares, PB dividend, Pioo par 70,000 70,000 Ordinary shares, P1 par value 10,000 10,000 Additional paid-in capital 90,000 90,000 Total paid-in capital 170,000 170,0 00 Retained eaming 101,510 Total equity 271, 510 242,950 Total liabilities and equity 670.396 637854Requirements: a. Prepare horizontal analysis based on the above statements presented (for percent: round of your answers to 2 decimal places) Music Lover, Inc.xlsx b. Evaluate the company's financial position and results of operation using the comparative statement analysis i. Short-term solvency analysis ii. Long-term financial position analysis iii. Operating efficiency and profitability analysis