Write a 350-700 Accounting word memo discussing ratio calculations regarding a horizontal and veritcal analysis.

ratios.xls

Home >Business & Finance homework help >Accounting homework help >Write a 350-700 Accounting word memo discussing ratio calculations regarding a horizontal and veritcal analysis.

Horizontal

HORIZONTAL ANALYSIS #1
INCOME STATEMENT	SHOW YOUR WORK (CALCULATIONS)
Enter the account titles from the Income statement for Berry's Bug Blasters. There are two sections - revenue and expenses.
Use the format below to complete your first HORIZONTAL ANALYSIS. I tried to include enough lines for the sections.
Key your numbers anc calculations in the orange spaces. Net income has a formula and should match the totals on the financial statements
for 2008 and 2007.
Account Titles	2008	2007	Variance	%
Revenue
Revenue	3,249,581.00	3,893,028.00	(643,447.0)	-17%
Total Revenue	3,249,581.00	3,893,028.00	(643,447.0)	-17%
Direct Expenses
salaries and wages	487,437.00	583,954.00	(96,517.0)	-17%
Vehicle Maintenance	64,992.00	77,861.00	(12,869.0)	-17%
Fuel	20,450.00	19,177.00	1,273.0	7%
Traps and Chemicals	1,378,204.00	1,651,101.00	(272,897.0)	-17%
Total Direct Expenses	1,951,083.00	2,332,093.00	(381,010.0)	-16%
Total Indirect Expenses	805,359.00	791,933.00	13,426.0	2%
Net Income	493,139.00	769,002.00	(275,863.0)	-36%
HORIZONTAL ANALYSIS #2
BALANCE SHEET
Enter the account titles from the Balance Sheet for Berry's Bug Blasters There are three sections - assets, liabilities, and equity.
Use the format below to complete your second HORIZONTAL ANALYSIS. I tried to include enough lines for the sections.
Account Titles	2008	2007	Variance	%
Current Assets
Cash	818,441.00	291,703.00	526,738.00	181%
Accounts receivable	812,395.00	811,048.00	1,347.00	0%
Inventory	205,934.00	205,934.00	- 0	0%
Total current Assets	1,836,770.00	1,308,685.00	528,085.00	40%
Fixed Assets
Vehicles, net of accumulated depreciation	66,803.00	134,201.00	(67,398.00)	-50%
Tools, net of accumulated depreciation	28,468.00	55,996.00	(27,528.00)	-49%
Total Fixed assets	95,271.00	190,197.00	(94,926.00)	-50%
Total Assets	1,932,041.00	1,498,882.00	433,159.00	29%
Account Titles
Current Liabilities
Accrued payroll taxes	36,007.00	42,367.00	(6,360.00)	-15%
Accounts Payable	270,798.00	324,419.00	(53,621.00)	-17%
Total current liabilities	306,805.00	366,786.00	(59,981.00)	-16%
Stockholder's equity
Common stock	70,000.00	70,000.00	- 0	0%
Retained earnings	1,062,096.00	293,095.00	769,001.00	262%
Net Income	493,140.00	769,001.00	(275,861.00)	-36%
Total Stockholder's equity	1,625,236.00	1,132,096.00	493,140.00	44%
Total Liabilities/Equity	1,932,041.00	1,498,882.00	433,159.00	29%

Vertical

VERTICAL ANALYSIS #1
INCOME STATEMENT	SHOW YOUR WORK (CALCULATIONS)
Enter the account titles from the Income statement for Berry's Bug Blasters There are two sections - revenue and expenses.
Use the format below to complete your first VERTICAL ANALYSIS. I tried to include enough lines for the sections.
NOTICE IT IS THE SAME SET OF NUMBERS, BUT THE CALCULATIONS ARE DIFFERENT.
		2008		2007		2008 revenue	2007 revenue
Account Titles		Amount	%	Amount	%	3249581.00	3893028.00
Direct Expenses
Salaries and wages		487,437.00	15%	583,954.00	15%
Vehicle Maintenance		64,992.00	2%	77,861.00	2%
Fuel		20,450.00	1%	19,177.00	0%
Traps and Chemicals		1,378,204.00	42%	1,651,101.00	42%
Total Direct Expenses		1,951,083.00	60%	2,332,093.00	60%
VERTICAL ANALYSIS #2
BALANCE SHEET
Enter the account titles from the Balance Sheet for Berry's Bug Blasters. There are three sections - assets, liabilities, and equity.
There are just enough lines to enter each set of numbers
Use the format below to complete your second VERTICAL ANALYSIS. I tried to include enough lines for the sections.
		2008		2007		2008	2007
Account Titles		Amount	%	Amount	%	total liabilities +	total liabilities +
Current Assets						total stockholders' equity	total stockholders' equity
Cash		818,441.00	42%	291,703.00	19%	1,932,041.00	1,498,882.00
Accounts receivable		812,395.00	42%	811,048.00	54%
Inventory		205,934.00	11%	205,934.00	14%
Total current Assets		1,836,770.00	95%	1,308,685.00	87%
Fixed Assets
Vehicles, Net of Acc Depr		66,803.00	3%	134,201.00	9%
Tools, Net of Acc Depr		28,468.00	1%	55,996.00	4%
Total Fixed assets		95,271.00	5%	190,197.00	13%
		2008		2007
Account Titles		Amount	%	Amount	%
Current Liabilities
Accrued payroll taxes		36,007.00	2%	42,367.00	3%
Accounts Payable		270,798.00	14%	324,419.00	22%
Total current liabilities		306,805.00	16%	366,786.00	24%
Shareholder's equity
Common stock		70,000.00	4%	70,000.00	5%
Retained earnings		1,062,096.00	55%	293,095.00	20%
Net Income		493,140.00	26%	769,001.00	51%
Total Stockholder's equity		1,625,236.00	84%	1,132,096.00	76%

Liquidity

	LIQUIDITY
1	Current Ratio	Current Assets	2008	1,836,770.00	5.99
		Current Liabilities		306,805.00
2	Acid Test (Quick) Ratio	Cash + ST+Receiv	2008	1,630,836.00	5.32
		Avg inventory		306,806.00
3	Receivables Turnover	Net Credit sales (assume 25% of total Revenue is credit sales)	2008	3,249,581.00	4.00
		Average Net Receivables		811,722.00
4	Inventory Turnover	Direct Expenses	2008	1,951,083.00	9.47
		Avg inventory		205,934.00
Enter the numerator and denominators above in orange for each year using the numbers from the financial reports for Bug Blasters	Enter the numerator and denominators above in orange using the numbers from the financial statements for Bug Blasters
If you can enter formulas for your calculations, that is OK. If you have to calculate off line (using a calculator for example), then just type the answer in the box
Make sure you review HOW THE RESULTS SHOULD BE DISPLAYED. Not all are percentages so be sure you know how the result should be presented.
	SHOW YOUR WORK (CALCULATIONS)

Profitability

	PROFITABILITY
1	Profit margin	Net income	2008	493,140.0	15%
		Net sales		3,249,581
2	Asset turnover	Net sales	2008	3,249,581	1.89
		Average total assets		1,715,462
3	Return on assets	Net income	2008	493,140.0	29%
		Average total assets		1,715,462
4	Return on stockholders equity	Net income - preferred	2008	493,139.0	36%
		Avg total stockholder's equity		1,378,666
	Enter the numerator and denominators above in orange using the numbers from the financial statements for Bug Blasters
	If you can enter formulas for your calculations, that is OK. If you have to calculate off line (using a calculator for example), then just type the answer in the box
	Make sure you review HOW THE RESULTS SHOULD BE DISPLAYED. Not all are percentages so be sure you know how the result should be presented.
	SHOW YOUR WORK (CALCULATIONS)

Solvency

SOLVENCY
Debt to assets ratio	Total accounts payable	2008	270,798.0	14%
	total assets		1,932,041
NOTE: SINCE THERE IS NO INTEREST EXPENSE, ONLY COMPLETE THE DEBT TO ASSETS RATIO NOT THE TIMES INTEREST EARNED
Enter the numerator and denominators above in orange using the numbers from the financial statements for Bug Blasters
If you can enter formulas for your calculations, that is OK. If you have to calculate off line (using a calculator for example), then just type the answer in the box
Make sure you review HOW THE RESULTS SHOULD BE DISPLAYED. Not all are percentages so be sure you know how the result should be presented.
SHOW YOUR WORK (CALCULATIONS)