Presented below is a balance sheet for the last two years: Prepare a horizontal

Question

Presented below is a balance sheet for the last two years:

Prepare a horizontal analysis. Display percentages to 3 decimal places (.654 = 65.4%). Discuss any line items from the balance sheet that may warrant further investigation from management.

2016 2015 Cash $118,000 $115,000 Accounts receivable $98,000 $ 77,000 Short-term investments $60,000 $65,000 Current assets $276,000 $257,000 Equipment, net of depreciation $220,000 $205,000 Land $75,000 $75,000 Total assets $571,000 $537,000 Accounts payable $72,000 $96,000 Wages payable $4,000 $3,000 Short-term revolving bank loan $85,000 $50,000 Current liabilities $161,000 $149,000 Long-term debt $128,000 $132,000 Total liabilities $289,000 $281,000 Common stock $100,000 $100,000

Explanation / Answer

Horizontal anaysis of Balance sheet

Particulars 2016 2015 change %age change Asset Cash 118,000 115,000 3,000 2.60 Account Receivable 98,000 77,000 21,000 27.30 Short Term Investment 60,000 65,000 (5,000) 7.70 Equipment , net of depreciation 220,000 205,000 15,000 7.31 Land 75,000 75,000 0 0 Total Asset 571,000 537,000 34,000 6.33 Liabilities Accounts Payable 72,000 96,000 (24,000) 25 Wages Payable 4,000 3,000 1,000 33.3 Shor term Revolving Loan 85,000 50,000 35,000 70 Long Term Debt 128,000 132,000 (4,000) 3.03 Total Liabilities 289,000 281,000 8,000 2.85 Stockholder's Equity Common Stock 100,000 100,000 0 0 Retained earning ( Assets - Total till above) 182,000 156,000 26,000 16.67 Tota Stock Holder's equity 282,000 256,000 26,000 10.15 Total Liabilities and stock holders' Eqyuity 571,000 537,000 34,000 6.33

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