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Balance Sheet 2016 2015 2014 Cash 50,000 45000 40,000 Accounts receivable 80,000 70000 60,000 Inventories 180,000 145000 110,000 Plant & equipment 300,000 280000 260,000 Less accumulated depreciation -40,000 -30000 -20,000 Total assets 570,000 510000 450,000 Accounts payable 100,000 125000 150,000 Accrued liabilities 70,000 60000 50,000 Mortgage payable 80,000 40000 60,000 Common stock 130,000 110000 90,000 Retained earnings 190,000 175000 160,000 Total liabilities and equity 570,000 510000 450,000 Income Statement 2014 2015 2016 Net Sales 680,000 600,000 640000 Cost of goods sold 410,000 330,000 370000 Gross profit 270,000 270,000 270000 Operating expenses 190,000 192,000 191000 Operating income 80,000 78,000 79000 Interest expense 7,000 2,000 4500 Profit before taxes 73,000 76,000 74500 Taxes 22,000 22,800 22400 Net income 51,000 53,200 52100 Other data: Cash dividends paid this year were $21,000
|
Balance Sheet |
2016 |
2015 |
2014 |
|
Cash |
50,000 |
45000 |
40,000 |
|
Accounts receivable |
80,000 |
70000 |
60,000 |
|
Inventories |
180,000 |
145000 |
110,000 |
|
Plant & equipment |
300,000 |
280000 |
260,000 |
|
Less accumulated depreciation |
-40,000 |
-30000 |
-20,000 |
|
Total assets |
570,000 |
510000 |
450,000 |
|
Accounts payable |
100,000 |
125000 |
150,000 |
|
Accrued liabilities |
70,000 |
60000 |
50,000 |
|
Mortgage payable |
80,000 |
40000 |
60,000 |
|
Common stock |
130,000 |
110000 |
90,000 |
|
Retained earnings |
190,000 |
175000 |
160,000 |
|
Total liabilities and equity |
570,000 |
510000 |
450,000 |
|
Income Statement |
2014 |
2015 |
2016 |
|
Net Sales |
680,000 |
600,000 |
640000 |
|
Cost of goods sold |
410,000 |
330,000 |
370000 |
|
Gross profit |
270,000 |
270,000 |
270000 |
|
Operating expenses |
190,000 |
192,000 |
191000 |
|
Operating income |
80,000 |
78,000 |
79000 |
|
Interest expense |
7,000 |
2,000 |
4500 |
|
Profit before taxes |
73,000 |
76,000 |
74500 |
|
Taxes |
22,000 |
22,800 |
22400 |
|
Net income |
51,000 |
53,200 |
52100 |
Other data:
- Cash dividends paid this year were $21,000.
- The change in accumulated depreciation account is the depreciation for the year.
Required:
- Using the balance sheets and income statement, prepare a Horizontal common-size analysis for both years.
- Comment on significant trends.
Expert Solution
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