Engaging Activity A-1 Unit 1 Financial Statement analysis

OZONE COMPANY
Income Statement
December 31, 2018, 2017 and 2016

2018 2017 2016

Sales 200,000.00 210,000.00 100,000.00

Sales returns and allowances 40,000.00 25,000.00 6,000.00

Net Sales 160,000.00 185,000.00 94,000.00

Cost of Good Sold 100,000.00 115,625.00 50,000.00

Gross Profit 60,000.00 69,375.00 44,000.00

Operating Expenses

Selling expenses 22,000.00 25,000.00 16,000.00

General expenses 8,000.00 12,000.00 8,000.00

Total operating expenses 30,000.00 37,000.00 24,000.00

Income from operations 30,000.00 32,375.00 20,000.00

Non-operating income 6,000.00 2,500.00 3,500.00

Income before interest expense and taxes 36,000.00 34,875.00 23,500.00

interest expense 4,000.00 3,500.00 3,000.00

Income before taxes 32,000.00 31,375.00 20,500.00

Income taxes ( 35% rate) 11,200.00 10,981.00 7,175.00

Net Income 20,800.00 20,394.00 13,325.00

 OZONE COMPANY
BALANCE SHEET
December 31, 2018, 2017 and 2016

2018 2017 2016

ASSETS
Current assets

Cash 65,000.00 70,000.00 75,000.00

Accounts Receivable 40,000.00 35,000.00 20,000.00

Marketable Securities 40,000.00 35,000.00 10,000.00

Inventory 100,000.00 80,000.00 100,000.00

Total current assets 245,000.00 220,000.00 205,000.00

Plants assets 200,000.00 160,000.00 170,000.00

total Assets 445,000.00 380,000.00 375,000.00

LIABILITIES

Current liabilites 110,800.00 105,000.00 104,000.00

Long-term Liabilities 160,000.00 145,000.00 140,000.00

TotAL Liabilities 270,800.00 250,000.00 244,000.00

Stockholders Equity

Common stocks, P5 par value 100,000.00 100,000.00 100,000.00

20,000 shares

Retained earnings 74,200.00 30,000.00 31,000.00

Total stockholders equity 174,200.00 130,000.00 131,000.00

Total Liabilities and Stockholder Equity 445,000.00 380,000.00 375,000.00

A.Required: Based on the above Financial statement. You are required to make an analysis using the
following tools: In your analysis you will use the following format:

1. On horizontal Analysis
1.1 Horizontal analysis computation(2016 :2017) (2017:2018)
1.2 Analysis and interpretation of your finding
1.3 Conclusion
1.4 State your recommendation
2. On Trend Analysis
1.1 Trend Analysis computation
1.2 Analysis and interpretation of your finding
1.3 Conclusion
1.4 State your recommendation

3. On Vertical Analysis
1.1 Vertical Analysis computation
1.2 Analysis and interpretation of your finding
1.3 Conclusion
1.4 State your recommendation