Perform a vertical and horizontal analysis for 20X3 (Income Statement & Balance
ID: 2416477 • Letter: P
Question
Perform a vertical and horizontal analysis for 20X3 (Income Statement & Balance Sheet). Discuss the Profitability and Solvency of the Company. Back up your analysis with calculations.
100.00%
Consolidated Statements of Financial Position As of June 30, 20X3, 20X2, and 20X1 (In Thousands) Horizontal Analysis Vertical Analysis 20X3 20X2 20X1 20X3 20X2 20X3 20X2 20X1 ASSETS Current assets: Cash and cash equivalents $ 56,248 $ 49,817 $ 69,703 -28.53% 1.06% 1.47% Short-term investments 12,742 13,057 13,692 -4.64% 0.28% 0.29% Income taxes receivable 3,178 16,258 6,699 142.69% 0.35% 0.14% Accounts receivable 2,148,653 2,133,686 2,168,516 -1.61% 45.59% 45.61% Inventories 608,277 464,977 482,630 -3.66% 9.93% 10.15% Total current assets 2,829,098 2,677,795 2,741,240 -2.31% 57.21% 57.66% Property, plant, and equipment, net 993,205 962,182 951,056 1.17% 20.56% 20.00% Investments 860,346 975,702 987,535 -1.20% 20.85% 20.77% Other assets 18,438 21,346 33,756 -36.76% 0.46% 0.71% Prepaid expenses 50,292 43,376 40,680 6.63% 0.93% 0.86% Total assets $4,751,379 $4,680,401 $4,754,267 -1.55% 100.00% 100.00% LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable $ 405,462 $ 342,075 $ 300,454 13.85% 7.31% 6.32% Current maturities of long-term debt 21,132 13,387 12,078 10.84% 0.29% 0.25% Accounts payable 332,859 788,232 773,003 1.97% 16.84% 16.26% Accrued expenses 318,871 634,060 649,395 -2.36% 13.55% 13.66% Total current liabilities 1,078,324 1,777,754 1,734,930 2.47% 37.98% 36.49% Long-term debt 1,305,837 1,081,513 1,009,506 7.13% 23.11% 21.23% Capital lease obligations 12,357 10,475 10,554 -0.75% 0.22% 0.22% Contingencies 500 - - 0.00% 0.00% Total liabilities 2,397,018 2,869,742 2,754,990 4.17% 61.31% 57.95% Stockholders' equity: Common stock, at stated value 500,491 496,563 492,013 0.92% 10.61% 10.35% Retained earnings 1,853,870 1,314,096 1,507,264 -12.82% 28.08% 31.70% Total stockholders' equity 2,354,361 1,810,659 1,999,277 -9.43% 38.69% 42.05% Total liabilities and stockholders' equity $4,751,379 $4,680,401 $4,754,267 -1.55% 100.00%100.00%
Explanation / Answer
Note: the vertical analysis of assets has been made by dividing the amount of individual asset by total assets. the vertical analysis of liabilities are calculated by dividing the amount of individual liability by total liabilities and shareholders equity. in the income statement the vertical analysis has been made by dividing all the sales and expenses, profits with the amount of sales.
The horizontal analysis is the percentage of difference of the amount of last year 20x2 and 20x3 the current year.
As compared to last year’s financial statements data, in the year 20x3 the company’s sales have increased and expenses have decreased substantially therefore the net income of the company have increased by 179.43%. The company has decreased selling and administrative expenses, research and development cost, interest expenses by substantial amount.
The long term liabilities have increased in the year and the company has issued additional common stock during the year for raising its fund. The company solvency has improved as compared to the last year 20x2.
Consolidated Statements of Financial Position As of June 30, 20X3, 20X2, and 20X1 (In Thousands) Horizontal Analysis Vertical Analysis 20X3 20X2 20X1 20X3 20X2 20X3 20X2 20X1 ASSETS Current assets: Cash and cash equivalents $ 56,248 $49,817 $ 69,703 -12.91% -28.53% 1.18% 1.06% 1.47% Short-term investments $ 12,742 $ 13,057.00 13,692 2.41% -4.64% 0.27% 0.28% 0.29% Income taxes receivable $ 3,178 $16,258 6,699 80.45% 142.69% 0.07% 0.35% 0.14% Accounts receivable $ 2,148,653 $2,133,686 2,168,516 -0.70% -1.61% 45.22% 45.59% 45.61% Inventories $ 608,277 $464,977 482,630 -30.82% -3.66% 12.80% 9.93% 10.15% #DIV/0! 0.00% Total current assets $ 2,829,098 $2,677,795 2,741,240 -5.65% -2.31% 59.54% 57.21% 57.66% Property, plant, and equipment, net $ 993,205 $962,182 951,056 -3.22% 1.17% 20.90% 20.56% 20.00% Investments $ 860,346 $975,702 987,535 11.82% -1.20% 18.11% 20.85% 20.77% Other assets $ 18,438 $21,346 33,756 13.62% -36.76% 0.39% 0.46% 0.71% Prepaid expenses $ 50,292 $43,376 40,680 -15.94% 6.63% 1.06% 0.93% 0.86% Total assets $ 4,751,379 $4,680,401 $4,754,267 -1.52% -1.55% 100% 100.00% 100.00% LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable $ 405,462 $ 342,075 $ 300,454 -18.53% 13.85% 8.53% 7.31% 6.32% Current maturities of long-term debt $ 21,132 $ 13,387 12,078 -57.85% 10.84% 0.44% 0.29% 0.25% Accounts payable $ 332,859 $ 788,232 773,003 57.77% 1.97% 7.01% 16.84% 16.26% Accrued expenses $ 318,871 $ 634,060 649,395 49.71% -2.36% 6.71% 13.55% 13.66% Total current liabilities $ 1,078,324 $ 1,777,754 1,734,930 39.34% 2.47% 22.69% 37.98% 36.49% #DIV/0! Long-term debt $ 1,305,837 $ 1,081,513 1,009,506 -20.74% 7.13% 27.48% 23.11% 21.23% Capital lease obligations $ 12,357 $ 10,475 10,554 -17.97% -0.75% 0.26% 0.22% 0.22% Contingencies $ 500 - - - 0.01% 0.00% 0.00% Total liabilities $ 2,397,018 $ 2,869,742 2,754,990 16.47% 4.17% 50.45% 61.31% 57.95% Stockholders' equity: Common stock, at stated value 500491 $ 496,563 492,013 -0.79% 0.92% 10.53% 10.61% 10.35% Retained earnings 1853870 $ 1,314,096 1,507,264 -41.08% -12.82% 39.02% 28.08% 31.70% Total stockholders' equity 2354361 $ 1,810,659 1,999,277 -30.03% -9.43% 49.55% 38.69% 42.05% Total liabilities and stockholders' equity $ 4,751,379 $ 4,680,401 $4,754,267 -1.52% -1.55% 100.00% 100.00% 100.00% Consolidated Statements of Income For the Years Ended June 30, 20X3, 20X2, and 20X1 (In Thousands) Horizontal Analysis Vertical Analysis 20X3 20X2 20X1 20X3 20X2 20X3 20X2 20X1 Sales $ 5,454,406 4253410 $ 3,625,143 -28.24% 17.33% 100.00% 100.00% 100.00% Cost of goods sold $ 4,366,640 3668563 3,270,670 -19.03% 12.17% 80.06% 86.25% 90.22% Gross profit $ 1,087,766 584847 354,473 -85.99% 64.99% 19.94% 13.75% 9.78% Selling, administrative, and general expenses $ 295,315 487587 508,208 39.43% -4.06% 5.41% 11.46% 14.02% Research and development costs $ 115,916 213830 224,743 45.79% -4.86% 2.13% 5.03% 6.20% Interest expense $ 103,808 189279 214,215 45.16% -11.64% 1.90% 4.45% 5.91% Income (loss) before income tax $ 572,727 $ (305,849) (592,693) 287.26% -48.40% 10.50% -7.19% -16.35% Provision (credit) for income taxes $ 32,953 $ (112,681) (283,936) 129.24% -60.31% 0.60% -2.65% -7.83% Net income (loss) for the year $ 539,774 $ (193,168) $ (308,757) 379.43% -37.44% 9.90% -4.54% -8.52%Related Questions
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