Horizontal and Vertical Analyses The following are comparative financial statements of the Perez Company for 2006, 2007, and 2008:
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Comparative Income Statements |
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|
For Years Ended December 31, |
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|
2008 |
2007 |
2006 |
|
|
Sales |
$407,000 |
$361,500 |
$332,000 |
|
Sales returns |
7,000 |
11,500 |
12,000 |
|
Net sales |
$400,000 |
$350,000 |
$320,000 |
|
Cost of goods sold |
244,000 |
222,000 |
205,000 |
|
Gross profit |
$156,000 |
$128,000 |
$115,000 |
|
Selling expenses |
45,825 |
39,550 |
35,690 |
|
Administrative expenses |
60,232 |
46,664 |
44,213 |
|
Interest expense |
4,150 |
4,200 |
3,580 |
|
Total expense |
$110,207 |
$90,414 |
$83,483 |
|
Income before income taxes |
$45,793 |
$37,586 |
$31,517 |
|
Income tax expense |
13,738 |
11,276 |
9,455 |
|
Net income |
$32,055 |
$26,310 |
$22,062 |
|
Number of common shares |
10,000 |
9,000 |
8,000 |
|
Earnings per share |
$3.21 |
$2.92 |
$2.76 |
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Comparative Balance Sheets |
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|
December 31, |
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|
2008 |
2007 |
2006 |
|
|
Cash |
$15,500 |
$12,650 |
$9,300 |
|
Receivables (net) |
11,000 |
9,350 |
6,600 |
|
Inventories |
38,000 |
30,000 |
22,250 |
|
Noncurrent assets |
286,500 |
250,000 |
220,350 |
|
Total Assets |
$351,000 |
$302,000 |
$258,500 |
|
Accounts payable |
$11,800 |
$9,500 |
$9,300 |
|
Notes payable |
16,200 |
13,500 |
11,700 |
|
Bonds payable |
38,000 |
39,000 |
36,500 |
|
Common stock, $5 par |
50,000 |
45,000 |
40,000 |
|
Premium on common stock |
90,000 |
72,000 |
56,000 |
|
Retained earnings |
145,000 |
123,000 |
105,000 |
|
Total Liabilities and Stockholders’ Equity |
$351,000 |
$302,000 |
$258,500 |
Required
On the basis of the given information:
1. Prepare horizontal analyses for Perez Company using a base year to date approach for 2006 through 2007, and 2006 through 2008.
2. Prepare vertical analyses for the 2007 and 2008 financial statements.