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
		========

Answer 1

1)Horizontal Analysis

		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%)

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

	2018	Percent
Net Sales	$200,000	100%
Cost of Goods Sold	$116,000	58%
Gross Margin	$84,000	42%
Operating Expenses	$46,000	23%
Income Before Taxes	$38,000	19%
Income Taxes	$15,200	7.6%
Net Income	$22,800	11.40%