Problem H Use this balance sheet to do horizontal analysis of the MJH Company. 2

Question

Problem H

Use this balance sheet to do horizontal analysis of the MJH Company. 2019 2018 amount percent Assets Current Assets $6,500 $5,000 Plant Assets $22,000 $25,000 Total Assets $28,500 $30,000 ======= ======= Liaiblities $5,500 $10,000 Stockholders’ Equity $23,000 $20,000 Total Liabilities and Equity $28,500 $30,000 ======== ======= Use the information below to do a vertical analysis 2018 Net sales $200,000 Cost of goods sold 116,000 Gross Margin 84,000 Operating Expenses 46,000 Income before Taxes 38000 Income taxes 15200 Net Income $22,800 ========

Explanation / Answer

1)Horizontal Analysis

2)Vertical Analysis

To conduct a vertical analysis of income statement, sales figure is generally used as the base and all other components of income statement like cost of sales, gross profit, operating expenses, etc. are shown as a percentage of sales.
This Assumption Is Used Taking sales as base vertial Analysis is done

Formula Used is:percentage of base=(Amount of individual item/Amount of base) *100

2019(A) 2018(B) Amount(A-B=C) Percent(C/B) Assets: Current Assets $6,500 $5,000 $1,500 30% Plant Assets $22,000 $25,000 ($3,000) (12%) Total Assets $28,500 $30,000 ($1,500) (5%) Liabilities Liabilities $5,500 $10,000 ($4,500) (45%) Equity Shareholder's equity $23,000 $20,000 $3,000 15% Total $28,800 $30,000 ($1,500) (5%)

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