Question
Horizontal and vertical analysis . The following financial statements pertain to Waterloo Corporation: WATERLOO CORPORATION Comparative Balance Sheets December 31,20X5 and 20X4 20X5 20X4 Assets
Horizontal and vertical analysis. The following financial statements pertain to Waterloo Corporation:
WATERLOO CORPORATION
Comparative Balance Sheets
December 31,20X5 and 20X4
20X5 20X4
Assets
Current Assets
Cash $ 21,500 $ 27,700
Accounts Receivable (net) 41,500 37,700
Inventories 6,750 6,450
Prepaid Expense 75,000 78,950
Total Current Assets $ 105,750 $ 103,950
Property, Plant, and Equipment
Buildings (net) $ 31,500 $ 32,700
Equipment (net) 35,00042,000
Vehicles (net) 166,250 173,950
Total Property, Plant, and Equipment $ 17,50 $ 5,200
Trademarks (net) $ 253,000 $ 252,700
Total assets $ 52,000 $ 72,700
Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable $ 16,500 $ 42,700
Notes Payable 5,500 27,700
Federal Taxes Payable 68,000 137,700
Total Current Liabilities $ 53,000 $ 27,700
Long-Term Debt $ 118,000 $ 162,700
Total Liabilities $ 28,000 $ 27,700
Stockholders' Equity
Common Stock, $10 par $ 113,000 $ 67,700
Retained Earnings 138,000 92,700
Total Stockholders' Equity $ 253,000 $ 252,700
Total Liabilities and Stockholders' Equity $ 258,000 $ 258,000
WATERLOO CORPORATION
Comparative Income Statements
For the Years Ending December 31, 20X5 and 20X4
Net Sales $ 585,000 $521,000
Cost of Goods Sold 330,000 250,000
Gross Profit $ 220,000 $250,000
Operating Expense 132,500 100,000
Income Before Interest and Taxes $ 87,500 $150,000
Interest Expense 12,500 3,000
Income Before Taxes $ 75,000 $147,000
Income Tax Expense 30,000 58,800
Net Income $ 45,000 $ 88,200
Instructions
a. Prepare a horizontal analysis of the balance sheet, showing dollar and percentage changes. Round all calculations in parts (a) and (b) to two decimal places.
b. Prepare a vertical analysis of the income statement by relating each item to net sales.
c. Briefly comment on the results of your analysis.
Prepare a horizontal analysis of the balance sheet showing percentage changes from 20X4 to 20X5. Round all calculations in parts (a) and (b) to two decimal places.
Questions
YOUR ANSWERS BASED UPON COURSE START DATE
WATERLOO CORPORATION
Comparative Balance Sheets
December 31,20X5 and 20X4
Assets
Current Assets
% Change
Cash
Accounts Receivable (net)
Inventories
Prepaid Expense
Total Current Assets
Buildings (net)
Equipment (net)
Vehicles (net)
Total Property, Plant, and Equipment
Trademarks (net)
Total assets
Accounts Payable
Notes Payable
Federal Taxes Payable
Total Current Liabilities
Long-Term Debt
Total Liabilities
Common Stock, $10 par
Retained Earnings
Total Stockholders' Equity
Total Liabilities and Stockholders' Equity
WATERLOO CORPORATION
Comparative Income Statements
Prepare a vertical analysis of the 20X5 income statement by relating each item to net sales.
20X5
Net Sales
Cost of Goods Sold
Gross Profit
Operating Expense
Income Before Interest and Taxes
Interest Expense
Income Before Taxes
Income Tax Expense
Net Income
Horizontal and vertical analysis. The following financial statements pertain to Waterloo Corporation: WATERLOO CORPORATION Comparative Balance Sheets December 31,20X5 and 20X4 Assets Current Assets Cash Accounts Receivable (net) Inventories Prepaid Expense Total Current Assets Property, Plant, and Equipment Buildings (net) Equipment (net) Vehicles (net) Total Property, Plant, and Equipment Trademarks (net) Total assets Liabilities and Stockholders' Equity Current Liabilities Accounts Payable Notes Payable Federal Taxes Payable Total Current Liabilities Long-Term Debt Total Liabilities Stockholders' Equity Common Stock, $10 par Retained Earnings Total Stockholders' Equity Total Liabilities and Stockholders' Equity 20X5 20X4 $ 21,500 41,500 6,750 75,000 $ 105,750 $ 27,700 37,700 6,450 78,950 $ 103,950 $ 31,500 $ 32,700 35,000 42,000 166,250 173,950 $ 17,50 $ 5,200 $ 253,000 $ 252,700 $ 52,000 $ 72,700 $ 16,500 $ 42,700 5,500 27,700 68,000 137,700 $ 53,000 $ 27,700 $ 118,000 $ 162,700 $ 28,000 $ 27,700 $ 113,000 138,000 $ 253,000 $ 258,000 $ 67,700 92,700 $ 252,700 $ 258,000 WATERLOO CORPORATION Comparative Income Statements For the Years Ending December 31, 20X5 and 20X4 Net Sales Cost of Goods Sold Gross Profit Operating Expense Income Before Interest and Taxes Interest Expense Income Before Taxes Income Tax Expense Net Income $ 585,000 330,000 $ 220,000 132,500 $ 87,500 12,500 $ 75,000 30,000 $ 45,000 $521,000 250,000 $250,000 100,000 $150,000 3,000 $147,000 58,800 $ 88,200 Instructions a. Prepare a horizontal analysis of the balance sheet, showing dollar and percentage changes. Round all calculations in parts (a) and (b) to two decimal places. b. Prepare a vertical analysis of the income statement by relating each item to net sales. c. Briefly comment on the results of your analysis. Prepare a horizontal analysis of the balance sheet showing percentage changes from 20X4 to 20X5. Round all calculations in parts (a) and (b) to two decimal places. Questions YOUR ANSWERS BASED UPON COURSE START DATE WATERLOO CORPORATION Comparative Balance Sheets December 31,20X5 and 20X4 Assets Current Assets Cash Accounts Receivable (net) Inventories Prepaid Expense Total Current Assets Buildings (net) Equipment (net) Vehicles (net) Total Property, Plant, and Equipment Trademarks (net) Total assets Accounts Payable Notes Payable Federal Taxes Payable Total Current Liabilities Long-Term Debt Total Liabilities Common Stock, $10 par Retained Earnings Total Stockholders' Equity Total Liabilities and Stockholders' Equity WATERLOO CORPORATION % Change Comparative Income Statements Prepare a vertical analysis of the 20X5 income statement by relating each item to net sales. Net Sales Cost of Goods Sold Gross Profit Operating Expense Income Before Interest and Taxes Interest Expense Income Before Taxes Income Tax Expense Net Income 20X5
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