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Horizontal and Vertical Analysis Sanborn Corporat...

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Horizontal and Vertical Analysis Sanborn Corporation's condensed comparative income statements for 20x8 and 20x7 appear below. The corporation's condensed comparative balance sheets for 20x8 and 20x7 appear on the next page. Sanborn Corporation Comparative Income Statements For the Years Ended December 31, 20x8 and 20x7 (in thousands of dollars) 20x8 20x7 Net sales $3,276,800 $3,146,400 Cost of goods sold 2,088,800 2,008,400 Gross margin $1,188,000 $1,138,000 Operating expenses Selling expenses $ 476,800 $ 518,000 Administrative expenses 447,200 423,200 Total operating expenses $ 924,000 $ 941,200 Income from operations $ 264,000 $ 196,800 Interest expense 65,600 39,200 Income before income taxes $ 198,400 $ 157,600 InNet income $ 136,000 $ 100,800 Earnings per share $3.40 $2.52 Sanborn Corporation Comparative Balance Sheets December 31, 20x8 and 20x7 20x8 20x7 Assets Cash $ 81,200 $ 40,800 Accounts receivable (net) 235,600 229,200 Inventory 574,800 594,800 Property, plant, and equipment (net) 750,000 720,000 Total assets $1,641,600 $1,584,800 Liabilities and Stockholders' Equity Accounts payable $ 267,600 $ 477,200 Notes payable (short-term) 200,000 400,000 Bonds payable 400,000, Common stock, $10 par value 400,000 400,000 Retained earnings 374,000 307,600 Total liabilities and stockholders' equity $1,641,600 $1,584,800 1. Prepare schedules showing the amount and percentage changes from 20x7 to 20x8 for the comparative income statements and the balance sheets. You may use the forms below. (40 points) Sanborn Corporation Comparative Income Statements For the Years Ended December 31, 20x8 and 20x7 (in thousands of dollars) 20x8 20x7 Increase or Decrease Amount Percentage Net sales $3,276,800 $3,146,400 Cost of goods sold 2,088,800 2,008,400 Gross margin $1,188,000 $1,138,000 Operating expenses Selling expenses $ 476,800 $ 518,000 Administrative expenses 447,200 423,200 Total operating expenses $ 924,000 $ 941,200 Income from operations $ 264,000 $ 196,800 Interest expense 65,600 39,200 Income before income taxes $ 198,400 $ 157,600 Income taxes expense 62,400 56,800 Net income $ 136,000 $ 100,800 Earnings per share $3.40 $2.52 Sanborn Corporation Comparative Balance Sheets December 31, 20x8 and 20x7 20x8 20x7 Increase or Decrease Amount Percentage Assets Cash $ 81,200 $ 40,800 Accounts receivable (net) 235,600 229,200 Inventory 574,800 594,800 Property, plant, and equipment (net) 750,000 720,000 Total assets $1,641,600 $1,584,800 Liabilities and Stockholders' Equity Accounts payable $ 267,600 $ 477,200 Notes payable (short-term) 200,000 400,000 Bonds payable 400,000 Common stock, $10 par value 400,000 400,000 Retained earnings 374,000 307,600 Total liabilities and stockholders' equity $1,641,600 $1,584,800 2. Using the forms below, prepare common-size income statements and balance sheets for 20x7 and 20x8 (40 points) Sanborn Corporation Common-Size Income Statements For the Years Ended December 31, 20x8 and 20x7 20x8 20x7 Net sales Cost of goods sold Gross margin Operating expenses Selling expenses Administrative expenses Total operating expenses Income from operations Interest expense Income before income taxes Income taxes expense Net income Sanborn Corporation Common-Size Balance Sheets December 31, 20x8 and 20x7 20x8 20x7 Assets Cash Accounts receivable (net) Inventory Property, plant, and equipment (net) Total assets Liabilities and Stockholders' Equity Accounts payable Notes payable (short-term) Bonds payable Common stock, $10 par value Retained earnings Total liabilities and stockholders' equity 3. Comment on the results in requirements 1 and 2 by indentifying favorable and unfavorable changes in the components and composition of the statements. (30 points)

 

Paper#4355 | Written in 18-Jul-2015

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