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АCTIVITY 1. A. The aggregated Statement of Financial Position of Jenny Company is presented below: 12/31/2015 500,000.00 1,584,000.00 364,000.00 532,000.00 1,188,000.00 12/31/2014 400,000.00 1,320,000.00 280,000.00 380,000.00 1,060,000.00 Current Assets Property, Plant & Equipment Current Liabilities Long-Term Liabilities Owner's Capital Required: Perform horizontal analysis for 2015 using 2014 as base year.

АCTIVITY 1. A. The aggregated Statement of Financial Position of Jenny Company is presented below: 12/31/2015 500,000.00 1,584,000.00 364,000.00 532,000.00 1,188,000.00 12/31/2014 400,000.00 1,320,000.00 280,000.00 380,000.00 1,060,000.00 Current Assets Property, Plant & Equipment Current Liabilities Long-Term Liabilities Owner's Capital Required: Perform horizontal analysis for 2015 using 2014 as base year.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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  • The statement comprehensive income of alexis company is produced below

 

GRADE 12 The result of historical horizontal analysis may be used for projecting financial statements. For example, we found from horizontal analysis that sales grew at an average of 10% per year. If sales for the CY 2015 is P1,000,000, and there are no changes in the economic situations and business operations, then we can project Sales for CY 2016 at (P1,100,000 1,000,000 + (1,000,000 X 10%). The results of historical horizontal analysis can also be used to evaluate the reasonableness of targets. For example, a company has a normal sales growth of 10% per year. Current year sales is P1,000,000. Management set target sales for the succeeding year at P1,500,000. This means the target growth in sales is 50%. Given the company's historical performance, this target may only be achievable if management implements changes such as increase sales force or invest advertising. ACTIVITY 1. A. The aggregated Statement of Financial Position of Jenny Company is presented below: 12/31/2015 12/31/2014 Current Assets Property, Plant & Equipment Current Liabilities 500,000.00 1.584,000.00 400,000.00 1,320,000.00 280,000.00 364,000.00 Long-Term Liabilities Owner's Capital 532,000.00 1,188,000.00 380,000.00 1,060,000.00 Required: Perform horizontal analysis 015 using as base year. B. The statement of comprehensive income of Alexis Company is reproduced below: 2015 2014 2,700,000.00 1,755,000.00 324,000.00 243,000.00 108.000.00 270,000.00 Net Sales Cost of Goods Sold Selling Expenses Administrative Expenses Interest Expense 3,375,000.00 2,092,000.00 540,000.00 270,000.00 148,000.00 324,000.00 Net Income Required: Perform Horizontal analysis for 2015 using 2014 as base year. Vertical Analysis, also called common-size analysis, is a technique that expresses each financial statement item as a percentage of a base amount (Weygandt et.al. 2013). For the SFP, the base amount is Total Assets. • Balance of Account / Total Assets. • From the common-size SFP, the analyst can infer the composition of assets and the company's financing mix. • Example 1: 6/9 % of assets Cash 200,000 200,000/1,400,000 = 14.3% Accounts Receivable 400,000 400,000/1,400,000 = 28.6% Inventory 250,000 250,000/1,400,000 = 17,9% Equipment 550,000 550,000/1,400,000 = 39.3% Total Assets 1,400,000 Sum of the components is 100% Accounts Payable 300,000 300,000/1,400,000 = 21.4% Notes Payable 400,000 400,000/1,400,000 = 28.6% Owner's, Capital 700,000 700,000/1,400,000 = 50.0% Total Liabilities and equity 1,400,000 Sum of the components is 100% Activity 2: Prepare a vertical analysis of DEF Statement of Financial Position and Statement of Comprehensive Income. DEF Company Statement of Financial Position As of December 31, 2016 ASSETS % 500,000 80,000 60,000 700,000 90,000 1.430,000 Cash Accounts Receivable Inventory Land Patent Total Assets 100% LIABILITIES Accounts Payable Notes Payable 400,000 250.000
Transcribed Image Text:GRADE 12 The result of historical horizontal analysis may be used for projecting financial statements. For example, we found from horizontal analysis that sales grew at an average of 10% per year. If sales for the CY 2015 is P1,000,000, and there are no changes in the economic situations and business operations, then we can project Sales for CY 2016 at (P1,100,000 1,000,000 + (1,000,000 X 10%). The results of historical horizontal analysis can also be used to evaluate the reasonableness of targets. For example, a company has a normal sales growth of 10% per year. Current year sales is P1,000,000. Management set target sales for the succeeding year at P1,500,000. This means the target growth in sales is 50%. Given the company's historical performance, this target may only be achievable if management implements changes such as increase sales force or invest advertising. ACTIVITY 1. A. The aggregated Statement of Financial Position of Jenny Company is presented below: 12/31/2015 12/31/2014 Current Assets Property, Plant & Equipment Current Liabilities 500,000.00 1.584,000.00 400,000.00 1,320,000.00 280,000.00 364,000.00 Long-Term Liabilities Owner's Capital 532,000.00 1,188,000.00 380,000.00 1,060,000.00 Required: Perform horizontal analysis 015 using as base year. B. The statement of comprehensive income of Alexis Company is reproduced below: 2015 2014 2,700,000.00 1,755,000.00 324,000.00 243,000.00 108.000.00 270,000.00 Net Sales Cost of Goods Sold Selling Expenses Administrative Expenses Interest Expense 3,375,000.00 2,092,000.00 540,000.00 270,000.00 148,000.00 324,000.00 Net Income Required: Perform Horizontal analysis for 2015 using 2014 as base year. Vertical Analysis, also called common-size analysis, is a technique that expresses each financial statement item as a percentage of a base amount (Weygandt et.al. 2013). For the SFP, the base amount is Total Assets. • Balance of Account / Total Assets. • From the common-size SFP, the analyst can infer the composition of assets and the company's financing mix. • Example 1: 6/9 % of assets Cash 200,000 200,000/1,400,000 = 14.3% Accounts Receivable 400,000 400,000/1,400,000 = 28.6% Inventory 250,000 250,000/1,400,000 = 17,9% Equipment 550,000 550,000/1,400,000 = 39.3% Total Assets 1,400,000 Sum of the components is 100% Accounts Payable 300,000 300,000/1,400,000 = 21.4% Notes Payable 400,000 400,000/1,400,000 = 28.6% Owner's, Capital 700,000 700,000/1,400,000 = 50.0% Total Liabilities and equity 1,400,000 Sum of the components is 100% Activity 2: Prepare a vertical analysis of DEF Statement of Financial Position and Statement of Comprehensive Income. DEF Company Statement of Financial Position As of December 31, 2016 ASSETS % 500,000 80,000 60,000 700,000 90,000 1.430,000 Cash Accounts Receivable Inventory Land Patent Total Assets 100% LIABILITIES Accounts Payable Notes Payable 400,000 250.000
GRADE 12 % of assets Cash 200,000 200,000/1,400,000 = 14.3% Accounts Receivable 400,000 400,000/1,400,000 = 28.6% Inventory 250,000 250,000/1,400,000 = 17.9% Equipment 550,000 550,000/1,400,000 = 39.3% Total Assets 1,400,000 Sum of the components is 100% Accounts Payable 300,000 300,000/1,400,000 = 21.4% Notes Payable 400,000 400,000/1,400,000 = 28.6% Owner's, Capital 700,000 700,000/1,400,000 = 50.0% Total Liabilities and equity 1,400,000 Sum of the components is 100% Activity 2: Prepare a vertical analysis of DEF Statement of Financial Position and Statement of Comprehensive Income. DEF Company Statement of Financial Position As of December 31, 2016 ASSETS Cash Accounts Receivable Inventory Land Patent Total Assets % 500,000 80,000 60,000 700,000 90.000 1,430,000 100% LIABILITIES Accounts Payable Notes Payable Total Liabilities 400,000 250,000 650,000 OWNER'S EQUITY X's Capital Total Liabilities & OE 780,000 1,430,000 100% DEF Company Statement of Comprehensive Income As of December 31, 2016 950,000 180.000 770,000 Less: Operating Expenses 180.000 590,000 25.000 565,000 180.000 385.000 Net Sales 100% Less: COGS Gross Profit Operating Income Less: Interest Expense Net Income before Tax Less: Income Tax Net Income after Tax 7 GRADE 12 What's more? Activity 3. Required: Perform Horizontal and Vertical Analysis for 2015 using 2014 as base Year. Mr. Cupido Trading Comparative Statement of Financial Position As of the year ended Dec. 31, 2015 Assets urrent Assets 2015 2014 C Property, Plant & Equipment Intangible Assets Total Assets 407,000 544,000 148,500 1.100.000 440,000 495,000 220.000 1.155.000 Liabilities & Owner's Equity Current Liabilities Long-Term Liabilities Owner's Capital Total Liabilities & Owner's Equity 1,100,000 264,000 825,000 66.000 1.155.000 231,000 786,500 82,500 Mr. Cupido Trading |||||||
Transcribed Image Text:GRADE 12 % of assets Cash 200,000 200,000/1,400,000 = 14.3% Accounts Receivable 400,000 400,000/1,400,000 = 28.6% Inventory 250,000 250,000/1,400,000 = 17.9% Equipment 550,000 550,000/1,400,000 = 39.3% Total Assets 1,400,000 Sum of the components is 100% Accounts Payable 300,000 300,000/1,400,000 = 21.4% Notes Payable 400,000 400,000/1,400,000 = 28.6% Owner's, Capital 700,000 700,000/1,400,000 = 50.0% Total Liabilities and equity 1,400,000 Sum of the components is 100% Activity 2: Prepare a vertical analysis of DEF Statement of Financial Position and Statement of Comprehensive Income. DEF Company Statement of Financial Position As of December 31, 2016 ASSETS Cash Accounts Receivable Inventory Land Patent Total Assets % 500,000 80,000 60,000 700,000 90.000 1,430,000 100% LIABILITIES Accounts Payable Notes Payable Total Liabilities 400,000 250,000 650,000 OWNER'S EQUITY X's Capital Total Liabilities & OE 780,000 1,430,000 100% DEF Company Statement of Comprehensive Income As of December 31, 2016 950,000 180.000 770,000 Less: Operating Expenses 180.000 590,000 25.000 565,000 180.000 385.000 Net Sales 100% Less: COGS Gross Profit Operating Income Less: Interest Expense Net Income before Tax Less: Income Tax Net Income after Tax 7 GRADE 12 What's more? Activity 3. Required: Perform Horizontal and Vertical Analysis for 2015 using 2014 as base Year. Mr. Cupido Trading Comparative Statement of Financial Position As of the year ended Dec. 31, 2015 Assets urrent Assets 2015 2014 C Property, Plant & Equipment Intangible Assets Total Assets 407,000 544,000 148,500 1.100.000 440,000 495,000 220.000 1.155.000 Liabilities & Owner's Equity Current Liabilities Long-Term Liabilities Owner's Capital Total Liabilities & Owner's Equity 1,100,000 264,000 825,000 66.000 1.155.000 231,000 786,500 82,500 Mr. Cupido Trading |||||||
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