Tiger Investment company wants to do an investment in Flash Corporation that have better opportunity for them in future and give them stable returns. As an analyst and accountant of Tiger you have to represent horizontal and vertical analysis of Flash Corporation.

FLASH CORPORATION INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2020 AND 2019

Year 2020 Year 2019

Net Sales $890,000 $995,000

Less: Cost of Goods Sold (including transportation) 475,000 593,000

Gross Profit $415,000 $402,000

Less: Operating Expenses

Selling Expenses:

Sales salaries and commissions $12,700 $15,300

Advertising 30,000 55,000

Delivery Service 15,200 12,200

Depreciation: store equipment 5,000 10,000

Other Selling Expenses 12,400 13,900

Total Selling Expenses $75,300 $106,400

General and administrative expense:

Administrative and office salaries $70,000 $65,000

Utilities 5,100 7,700

Depreciation: plant and equipment 6,000 2,000

Other general and administrative expenses 15,700 14,600

Total general and administrative expenses $96,800 $89,300

Total operating expenses $172,100 $195,700

Operating Income $242,900 $206,300

Less (add): Non operating Items:

Interest expense $ 30,000 $23,000

Purchase discounts lost 1,000 5,000

31,000 28,000

Income before Income Taxes $211,900 $178,300

Income Tax Expense 35,000 48,000

Net Income $176,900 $130,300

FLASH CORPORATION COMPARITIVE BALANCE SHEET ENDED ON DECEMBER 31, 2020 AND 2019

2020 2019

Current Assets:

Cash and Cash Equivalent $ 25,000 $ 33,000

Marketable Securities 68,000 83,000

Accounts Receivable 350,000 331,000

Inventory 100,000 63,000

Prepaid Expenses 24,000 13,000

Total Current Assets $567,000 $523,000

Non Current Assets:

Store Equipment 324,000 333,000

(net of accumulated depreciation)

Plant and Equipment 501,000 475,000

(net of accumulated depreciation)

Total Assets $1,392,000 $1,331,000

Liabilities and Stockholders Equity

Current liabilities:

Notes Payable (Short Term) $ 95,000 $ 85,000

Accounts Payable 56,000 66,000

Interest Payable 43,000 58,000

Income Taxes Payable 58,000 47,000

Other Accrued Expenses payable 55,000 45,000

Total Current Liabilities $307,000 $301,000

Non-Current Liabilities:

Notes Payable (Long term) 40,000 0

Bonds Payable 400,000 300,000

Total Liabilities $747,000 $601,000

Stockholders’ Equity:

9% preferred stock $100 par $40,000 $65,000

Common Stock, $50 par 320,000 270,000

Additional Paid-in-Capital 80,000 100,000

Retained Earnings 205,000 295,000

Total Stockholders’ Equity $645,000 $730,000

Total Liabilities and Stockholder’s Equity $1,392,000 $1,331,000

Instructions:

a. Prepare a horizontal and vertical analysis of Flash Corporation.

b. Illustrate your findings in your own wording for a minimum of 400 words and a maximum of 500 by comparing performance of company in both years.