I.

HORIZONTAL ANALYSIS
201B 201A Peso Change % Change
Cash 290,000 150,000 140,000 93%
Marketable Securities 1,000,000 850,000 150,000 18%
Accounts Receivable, net 1,000,000 500,000 500,000 100%
Inventories 500,000 750,000 -250,000 -33%
Prepaid expenses 90,000 100,000 -10,000 -10%
Total Current Assets 2,880,000 2,350,000 530,000 23%

Land 700,000 500,000 200,000 40%

Building, net 500,000 550,000 -50,000 -9%
Machinery and equipment, net 1,500,000 1,700,000 -200,000 -12%
Total Noncurrent Assets 2,700,000 2,750,000 -50,000 -2%
Total Assets 5,580,000 5,100,000 480,000 9%

Notes Payable, trade 150,000 100,000 50,000 50%

Accounts Payable, net 635,000 610,000 25,000 4%
Expenses Payable 20,000 40,000 -20,000 -50%
Total Current liabilities 805,000 750,000 55,000 7%
Long-Term Notes 2,250,000 2,350,000 -100,000 -4%
Total Liabilities 3,055,000 3,100,000 -45,000 -1%
Owner's Capital 2,525,000 2,000,000 525,000 26%
Total Liabilities and Equity 5,580,000 5,100,000 480,000 9%
II. Vertical Analysis

201B
Gross Sales 5,250,000
Less: Sales Returns and Allowances 250,000
Net Sales 5,000,000
Less: Cost of Goods Sold
Inventory, Dec. 31, 2018 750,000
Purchases 2,750,000
Inventory , Dec. 31, 2019 500,000 3,000,000
Gross Profit 2,000,000
Less: Selling Expenses 400,000
Administrative Expenses 600,000
Income from operations 1,000,000
Interest expense 250,000
Income before taxes 750,000
Income taxes 225,000
Net Income 525,000
Percentage
105%
5%
100%

60%
40%
8%
12%
20%
5%
15%
5%
11%
III. Ratio Analysis

1. Net working capital 201A 201B

current assets 2,350,000 2,880,000
current liabilities 750,000 805,000
net working capital 1,600,000 2,075,000
2. Current ratio 201A 201B
current assets 2,350,000 2,880,000
current liabilities 750,000 805,000
3.13 3.58
3. Acid-test ratio 201A 201B
Quick assets 1,500,000 2,290,000
current liabilities 750,000 805,000
2 2.84
4. Profit margin
net income 525,000
net sales 5,000,000
11%
5. Return on equity
net income 525,000
average stockholders equity 2,262,500
23%
6. Return on assets
net income 525,000
average total assets 5,340,000
10%
7. Accounts receivable turnover
net sales 5,000,000
Average accounts receivable 750,000
6.67
8. Inventory turnover
cost of goods sold 3,000,000
average inventory 625,000
4.8
9. Debt ratio 201A 201B
total liabilities 3,100,000 3,055,000
total assets 5,100,000 5,580,000
0.61 0.55
10. Debt-to-equity Ratio 201A 201B
total liabilities 3,100,000 3,055,000
total stockholders equity 2,000,000 2,525,000
1.55 1.21