Question

In: Accounting

Use this balance sheet to do horizontal analysis of the Howard Company. 2019 2018 amount percent...

Use this balance sheet to do horizontal analysis of the Howard Company.
2019 2018 amount percent
Assets
Current Assets $13,000 $10,000
Plant Assets $44,000 $50,000
Total Assets $57,000 $60,000
Liabilities $11,000 $20,000
Stockholders' Equity $46,000 $40,000
Total Liabilities and Equity $57,000 $60,000

Financially, do you think this company is stronger in 2018 or 2019?

2018 because there are more assets

2018 because there are fewer liabilities and more current assets to pay the bills.

2018 because the total liabilities and equity went up.

2019 because there are fewer liabilities and more current assets to pay those bills

Solutions

Expert Solution

Use this balance sheet to do horizontal analysis of the Howard Company.
2019 2018 amount percent
Assets
Current Assets $13,000 $10,000 $3,000 30.00% Increased in 2019
Plant Assets $44,000 $50,000 ($6,000) -12.00% Decreased in 2019
Total Assets $57,000 $60,000 ($3,000) -5.00% Decreased in 2019
Liabilities $11,000 $20,000 ($9,000) -45.00% Decreased in 2019
Stockholders' Equity $46,000 $40,000 $6,000 15.00% Increased in 2019
Total Liabilities and Equity $57,000 $60,000 ($3,000) -5.00% Decreased in 2019
Financially, do you think this company is stronger in 2018 or 2019?  Obvisously 2019
2018 because there are more assets
2018 because there are fewer liabilities and more current assets to pay the bills.
2018 because the total liabilities and equity went up.
? 2019 because there are fewer liabilities and more current assets to pay those bills
To Add a Note: The Assets portion is went up by $46,000 in 2019 where as it stood only $40,000 in 2018 because of retained earnings went up by $6,000.

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