The LACAL Company sells computer parts through a retail store that it operates.
ID: 2453229 • Letter: T
Question
The LACAL Company sells computer parts through a retail store that it operates. The firm's comparative income statement and balance sheet for the years 2013 and 2012 are shown below.
Prepare both a horizontal and a vertical analysis of the statements
Net Sales 572,000 550,000 Cost of Goods Sold 314,600 286,000 Gross Profit on Sales 257,400 264,000 Operating Expenses Selling Expenses 74,360 88,000 General and Administrative Expenses 28,600 44,000 Total Operating Expenses 102,960 132,000 Net Income Before Income Taxes 154,440 132,000 Income Tax Expense 46,332 33,000 Net Income After Income Taxes 108,108 99,000Explanation / Answer
1
Horizontal Analysis:
THE LACAL COMPANY
Income Statement
December 31, 2013 and 2012
2,013
2,012
Change
Change %
A
B
C= A-B
C/B
Net Sales
$ 572,000.00
$ 550,000.00
$ 22,000.00
4.00%
Cost of Goods Sold
$ 314,600.00
$ 286,000.00
$ 28,600.00
10.00%
Gross Profit on Sales
$ 257,400.00
$ 264,000.00
$ (6,600.00)
-2.50%
Operating Expenses
Selling Expenses
$ 74,360.00
$ 88,000.00
$ (13,640.00)
-15.50%
General and Administrative Expenses
$ 28,600.00
$ 44,000.00
$ (15,400.00)
-35.00%
Total Operating Expenses
$ 102,960.00
$ 132,000.00
$ (29,040.00)
-22.00%
Net Income Before Income Taxes
$ 154,440.00
$ 132,000.00
$ 22,440.00
17.00%
Income Tax Expense
$ 46,332.00
$ 33,000.00
$ 13,332.00
40.40%
Net Income After Income Taxes
$ 108,108.00
$ 99,000.00
$ 9,108.00
9.20%
THE LACAL COMPANY
Comparative Balance Sheer
December 31, 2013 and 2012
2,013
2,012
Change
Change %
A
B
C= A-B
C/B
Assets
Current Assets
Cash
$ 148,500.00
132000
$ 16,500.00
12.50%
Accounts Receivable
$ 151,200.00
144000
$ 7,200.00
5.00%
Merchandise Inventory
$ 213,300.00
180000
$ 33,300.00
18.50%
Total Current Assets
$ 513,000.00
$ 456,000.00
$ 57,000.00
12.50%
Property, Plant, and Equipment
Land
$ 205,200.00
144000
$ 61,200.00
42.50%
Building and Equipment
$ 631,800.00
600000
$ 31,800.00
5.30%
Total Property, Plant, and Equipment
$ 837,000.00
$ 744,000.00
$ 93,000.00
12.50%
Total Assets
$ 1,350,000.00
$ 1,200,000.00
$ 150,000.00
12.50%
Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable
$ 364,500.00
300000
$ 64,500.00
21.50%
Other Payable
$ 216,000.00
240000
$ (24,000.00)
-10.00%
Total Current Liabilities
$ 580,500.00
$ 540,000.00
$ 40,500.00
7.50%
Long-Term Liabilities
Mortgage Payable
$ 137,700.00
174108
$ (36,408.00)
-20.91%
Total Long-Term Liabilities
$ 137,700.00
$ 174,108.00
$ (36,408.00)
-20.91%
Total Liabilities
$ 718,200.00
$ 714,108.00
$ 4,092.00
0.57%
Stockholders' Equity
Common Stock
$ 189,000.00
180000
$ 9,000.00
5.00%
Paid-in Capital — Common Stock
$ 172,800.00
144000
$ 28,800.00
20.00%
Retained Earnings
$ 270,000.00
161892
$ 108,108.00
66.78%
Total Stockholders' Equity
$ 631,800.00
$ 485,892.00
$ 145,908.00
30.03%
Total Liabilities and Stockholders' Equity
$ 1,350,000.00
$ 1,200,000.00
$ 150,000.00
12.50%
2
Vertical Analysis:
THE LACAL COMPANY
Income Statement
December 31, 2013 and 2012
2,013
2,012
Net Sales
$ 572,000.00
100.00%
$ 550,000.00
100.00%
Cost of Goods Sold
$ 314,600.00
55.00%
$ 286,000.00
52.00%
Gross Profit on Sales
$ 257,400.00
45.00%
$ 264,000.00
48.00%
Operating Expenses
Selling Expenses
$ 74,360.00
13.00%
$ 88,000.00
16.00%
General and Administrative Expenses
$ 28,600.00
5.00%
$ 44,000.00
8.00%
Total Operating Expenses
$ 102,960.00
18.00%
$ 132,000.00
24.00%
Net Income Before Income Taxes
$ 154,440.00
27.00%
$ 132,000.00
24.00%
Income Tax Expense
$ 46,332.00
8.10%
$ 33,000.00
6.00%
Net Income After Income Taxes
$ 108,108.00
18.90%
$ 99,000.00
18.00%
THE LACAL COMPANY
Comparative Balance Sheer
December 31, 2013 and 2012
2,013
2,012
A
B
Assets
Current Assets
Cash
$ 148,500.00
11.00%
132000
11.00%
Accounts Receivable
$ 151,200.00
11.20%
144000
12.00%
Merchandise Inventory
$ 213,300.00
15.80%
180000
15.00%
Total Current Assets
$ 513,000.00
38.00%
$ 456,000.00
38.00%
Property, Plant, and Equipment
Land
$ 205,200.00
15.20%
144000
12.00%
Building and Equipment
$ 631,800.00
46.80%
600000
50.00%
Total Property, Plant, and Equipment
$ 837,000.00
62.00%
$ 744,000.00
62.00%
Total Assets
$ 1,350,000.00
100.00%
$ 1,200,000.00
100.00%
Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable
$ 364,500.00
27.00%
300000
25.00%
Other Payable
$ 216,000.00
16.00%
240000
20.00%
Total Current Liabilities
$ 580,500.00
43.00%
$ 540,000.00
45.00%
Long-Term Liabilities
Mortgage Payable
$ 137,700.00
10.20%
174108
14.51%
Total Long-Term Liabilities
$ 137,700.00
10.20%
$ 174,108.00
14.51%
Total Liabilities
$ 718,200.00
53.20%
$ 714,108.00
59.51%
Stockholders' Equity
Common Stock
$ 189,000.00
14.00%
180000
15.00%
Paid-in Capital — Common Stock
$ 172,800.00
12.80%
144000
12.00%
Retained Earnings
$ 270,000.00
20.00%
161892
13.49%
Total Stockholders' Equity
$ 631,800.00
46.80%
$ 485,892.00
40.49%
Total Liabilities and Stockholders' Equity
$ 1,350,000.00
100.00%
$ 1,200,000.00
100.00%
1
Horizontal Analysis:
THE LACAL COMPANY
Income Statement
December 31, 2013 and 2012
2,013
2,012
Change
Change %
A
B
C= A-B
C/B
Net Sales
$ 572,000.00
$ 550,000.00
$ 22,000.00
4.00%
Cost of Goods Sold
$ 314,600.00
$ 286,000.00
$ 28,600.00
10.00%
Gross Profit on Sales
$ 257,400.00
$ 264,000.00
$ (6,600.00)
-2.50%
Operating Expenses
Selling Expenses
$ 74,360.00
$ 88,000.00
$ (13,640.00)
-15.50%
General and Administrative Expenses
$ 28,600.00
$ 44,000.00
$ (15,400.00)
-35.00%
Total Operating Expenses
$ 102,960.00
$ 132,000.00
$ (29,040.00)
-22.00%
Net Income Before Income Taxes
$ 154,440.00
$ 132,000.00
$ 22,440.00
17.00%
Income Tax Expense
$ 46,332.00
$ 33,000.00
$ 13,332.00
40.40%
Net Income After Income Taxes
$ 108,108.00
$ 99,000.00
$ 9,108.00
9.20%
THE LACAL COMPANY
Comparative Balance Sheer
December 31, 2013 and 2012
2,013
2,012
Change
Change %
A
B
C= A-B
C/B
Assets
Current Assets
Cash
$ 148,500.00
132000
$ 16,500.00
12.50%
Accounts Receivable
$ 151,200.00
144000
$ 7,200.00
5.00%
Merchandise Inventory
$ 213,300.00
180000
$ 33,300.00
18.50%
Total Current Assets
$ 513,000.00
$ 456,000.00
$ 57,000.00
12.50%
Property, Plant, and Equipment
Land
$ 205,200.00
144000
$ 61,200.00
42.50%
Building and Equipment
$ 631,800.00
600000
$ 31,800.00
5.30%
Total Property, Plant, and Equipment
$ 837,000.00
$ 744,000.00
$ 93,000.00
12.50%
Total Assets
$ 1,350,000.00
$ 1,200,000.00
$ 150,000.00
12.50%
Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable
$ 364,500.00
300000
$ 64,500.00
21.50%
Other Payable
$ 216,000.00
240000
$ (24,000.00)
-10.00%
Total Current Liabilities
$ 580,500.00
$ 540,000.00
$ 40,500.00
7.50%
Long-Term Liabilities
Mortgage Payable
$ 137,700.00
174108
$ (36,408.00)
-20.91%
Total Long-Term Liabilities
$ 137,700.00
$ 174,108.00
$ (36,408.00)
-20.91%
Total Liabilities
$ 718,200.00
$ 714,108.00
$ 4,092.00
0.57%
Stockholders' Equity
Common Stock
$ 189,000.00
180000
$ 9,000.00
5.00%
Paid-in Capital — Common Stock
$ 172,800.00
144000
$ 28,800.00
20.00%
Retained Earnings
$ 270,000.00
161892
$ 108,108.00
66.78%
Total Stockholders' Equity
$ 631,800.00
$ 485,892.00
$ 145,908.00
30.03%
Total Liabilities and Stockholders' Equity
$ 1,350,000.00
$ 1,200,000.00
$ 150,000.00
12.50%
2
Vertical Analysis:
THE LACAL COMPANY
Income Statement
December 31, 2013 and 2012
2,013
2,012
Net Sales
$ 572,000.00
100.00%
$ 550,000.00
100.00%
Cost of Goods Sold
$ 314,600.00
55.00%
$ 286,000.00
52.00%
Gross Profit on Sales
$ 257,400.00
45.00%
$ 264,000.00
48.00%
Operating Expenses
Selling Expenses
$ 74,360.00
13.00%
$ 88,000.00
16.00%
General and Administrative Expenses
$ 28,600.00
5.00%
$ 44,000.00
8.00%
Total Operating Expenses
$ 102,960.00
18.00%
$ 132,000.00
24.00%
Net Income Before Income Taxes
$ 154,440.00
27.00%
$ 132,000.00
24.00%
Income Tax Expense
$ 46,332.00
8.10%
$ 33,000.00
6.00%
Net Income After Income Taxes
$ 108,108.00
18.90%
$ 99,000.00
18.00%
THE LACAL COMPANY
Comparative Balance Sheer
December 31, 2013 and 2012
2,013
2,012
A
B
Assets
Current Assets
Cash
$ 148,500.00
11.00%
132000
11.00%
Accounts Receivable
$ 151,200.00
11.20%
144000
12.00%
Merchandise Inventory
$ 213,300.00
15.80%
180000
15.00%
Total Current Assets
$ 513,000.00
38.00%
$ 456,000.00
38.00%
Property, Plant, and Equipment
Land
$ 205,200.00
15.20%
144000
12.00%
Building and Equipment
$ 631,800.00
46.80%
600000
50.00%
Total Property, Plant, and Equipment
$ 837,000.00
62.00%
$ 744,000.00
62.00%
Total Assets
$ 1,350,000.00
100.00%
$ 1,200,000.00
100.00%
Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable
$ 364,500.00
27.00%
300000
25.00%
Other Payable
$ 216,000.00
16.00%
240000
20.00%
Total Current Liabilities
$ 580,500.00
43.00%
$ 540,000.00
45.00%
Long-Term Liabilities
Mortgage Payable
$ 137,700.00
10.20%
174108
14.51%
Total Long-Term Liabilities
$ 137,700.00
10.20%
$ 174,108.00
14.51%
Total Liabilities
$ 718,200.00
53.20%
$ 714,108.00
59.51%
Stockholders' Equity
Common Stock
$ 189,000.00
14.00%
180000
15.00%
Paid-in Capital — Common Stock
$ 172,800.00
12.80%
144000
12.00%
Retained Earnings
$ 270,000.00
20.00%
161892
13.49%
Total Stockholders' Equity
$ 631,800.00
46.80%
$ 485,892.00
40.49%
Total Liabilities and Stockholders' Equity
$ 1,350,000.00
100.00%
$ 1,200,000.00
100.00%
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