Question

In: Finance

Toledo Toy, a manufacturer of infants’ blocks, presented the following data in its last annual report....

Toledo Toy, a manufacturer of infants’ blocks, presented the following data in its last annual report. This trend analysis begins with the year of formation, 2003.

2006

2005

2004

2003

Sales

$61,000

$41,000

$25,000

$13,000

Cost of Sales

$41,300

$28,175

$17,201

$9,000

Net Income

$9,919

$6,412

$3,850

$2,000

Cases of Blocks Shipped

33,126

22,681

13,900

7,400

Required:

a.

Using 2003 as the base year, perform a horizontal, common-size analysis.

b.

Comment on the results of the horizontal analysis.

Solutions

Expert Solution

a.

Horizontal Analysis
2004 2005 2006
Sales 92.31% 215.38% 369.23%
Cost of Sales 91.12% 213.06% 358.89%
Net Income 92.50% 220.60% 395.95%
Cases of Blocks Shipped 87.84% 206.50% 347.65%

Formulae attached for calculation understanding

b. The horizontal analysis shows a steady increase in the Sales, cost of sales and Net Income of the business. The Increase in net income has been more or less proprtionate to the increase in Sales indicating that the business has maintained its cost to sales ratio. The Net income has increased from 92.5% in 2004 to 220.6% next year and the increase in NI has been 396% in 2006 as compared to 2003. It can also be observed that the increase in number of cases shipped has been increasing in almost the same proportion.

jeff jeffy answered 1 year ago
Next > < Previous

Related Solutions

Presented below are financial data from ECI’s 2016 annual report. Your job is to take this...
Presented below are financial data from ECI’s 2016 annual report. Your job is to take this information and put together a cash flow statement. Balance Sheet Data 12/31/2016 12/31/2015 Cash 102,500 45,000 Net Accts Receivable 28,000 35,000 Inventories 270,000 200,000 Land 43,000 35,000 Plant Assets, Gross 274,000 260,000 Accumulated Depreciation 82,000 75,000 Accounts Payable 50,000 64,000 Wages Payable 6,000 1,000 ST Notes Payable 3,000 10,000 Dividends Payable 3,000 2,000 LT Bonds Payable 107,000 90,000 Common Stock 200,000 170,000 APIC-CS 207,000...
You are preparing an equity research report focusing on Mattel (a major toy manufacturer). You identify...
You are preparing an equity research report focusing on Mattel (a major toy manufacturer). You identify the following from Mattel’s most recent financial statements. Return on Equity (ROE)                          .12 Dividends                                               $288 Accounts Payable                                  $900 Average Days Payable                              33 Total Liabilities                                    $5,000 Retention Ratio                                      0.60 Profit Margin                                            .05 Tax Rate                                                   .24 a. Conduct a three-stage ROE Decomposition (DuPont Analysis) for Mattel b. As you are explaining how to conduct the ROE Decomposition, your assistant...
You are preparing an equity research report focusing on Mattel (a major toy manufacturer). You identify...
You are preparing an equity research report focusing on Mattel (a major toy manufacturer). You identify the following from Mattel’s most recent financial statements. Return on Equity (ROE)       .12 Dividends  $288 Accounts Payable $900 Average Days Payable   33 Total Liabilities $5,000 Retention Ratio  0.60 Profit Margin       .05 Tax Rate      .24 a. Conduct a three-stage ROE Decomposition (DuPont Analysis) for Mattel. b. As you are explaining how to conduct the ROE Decomposition, your assistant asks, “Because increasing the equity multiplier will increase the return on equity...
1--Presented below are select financial data from Major Drug’s annual report: Amounts in millions Year 1...
1--Presented below are select financial data from Major Drug’s annual report: Amounts in millions Year 1 Year 2 Balance sheet Accounts receivable (net) $9,367 $13,765 Inventory 6,860 6,239 Income statement Net sales $52,716 $61,498 Cost of goods sold 7,541 8,525 What can be said about Major Drug’s accounts receivable turnover for Year 2? It improved from Year 1 to Year 2 Major Drug collected receivables less effectively in Year 2 as compared to Year 1 Fewer customers purchased items on...
The 2019 annual report for a company includes the following items in its footnotes: a. The...
The 2019 annual report for a company includes the following items in its footnotes: a. The useful life of machinery has been increased from 10 to 15 years. b. The expected tax rate used to calculate income tax provision has increased from 33% to 38%. c. The company has started to capitalize small tools purchased beginning in 2006. For each of the above, determine the effect (higher, lower, or unchanged) of the change on the ratios listed below for the...
A toy manufacturer makes its own wind-up motors, which are then put into its toys While the toy manufacturing process is continuous
A toy manufacturer makes its own wind-up motors, which are then put into its toys While the toy manufacturing process is continuous, the motors are intermittent flow. Data on the manufacture of the motors appears below. Annual demand (D)-50,000 units Daily subassembly production rate = 1,000  Setup cost (S) = $85 per batch   Daily subassembly usage rate = 200Carrying cost = $.20 per unit per year   1. To minimize cost, how large should each batch of subassemblies be?  2. What is the average inventory...
The company disclosed the following lease information in its 2018 annual report related to its leasing...
The company disclosed the following lease information in its 2018 annual report related to its leasing activities (in millions). Capital leases Operating leases 2019 $307 $2,471 2020 286 2,302 2021 262 1,202 2022 251 980 2023 116 830 After 2023 703 9,130 Total $1,925 $16,915 Amount representing interest (754) Present value of net minimum lease payments $1,171 What effect does the failure to capitalize operating leases have on the company’s balance sheet? Over the life of the lease, what effect...
Refer to the 2017 annual report of Woolworth on its website, and answer the following questions...
Refer to the 2017 annual report of Woolworth on its website, and answer the following questions using the consolidated income statement and balance sheet/ statement of financial position and notes to the consolidated financial statements. The Woolworth income statement shows a deduction (in brackets) for income tax expense. Would this expense item be seen in the income statement of a partnership? Explain your answer. In the statement of changes in equity regarding retained earnings, how is the total profit avail­able...
Refer to the 2017 annual report of Woolworth on its website, and answer the following questions...
Refer to the 2017 annual report of Woolworth on its website, and answer the following questions using the consolidated income statement and balance sheet/ statement of financial position and notes to the consolidated financial statements 1.Refer to the balance sheet (statement of financial position) of Woolworth and the note titled ‘issued capital’. How do these differ from that of a typical partnership? Explain. 2.Woolworth is required to produce a statement of cash flows (cash flow statement) and include this in...
The Following data are the taken from the December 31 annual report of Bailey Company: Bailey...
The Following data are the taken from the December 31 annual report of Bailey Company: Bailey had 1,000,000 common shares outstanding during this entire period and there is no public market for Bailey Company shares. Also, during this period, Simpson Corp. Bought Bailey shares for cash, as follows: January 1, 2004 10,000 shares at $10 per shares January 1, 2005 290,000 shares @ $11 per share, increasing ownership to 300,000 shares January 1, 2006 700,000 Shares @ 15 per share,...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT