Question

Please create a horizontal and vertical analysis

Jane Doe CORPORATION
CONSOLIDATED BALANCE SHEETS
(in millions, except per share data)
	Sep 30,	Oct 1,
	2018	2017
ASSETS
Current assets:
Cash and cash equivalents	$          8,756.30	$          2,462.30
Short-term investments	181.50	228.60
Accounts receivable, net	693.10	870.40
Inventories	1,400.50	1,364.00
Prepaid expenses and other current assets	1,462.80	358.10
Total current assets	12,494.20	5,283.40
Long-term investments	267.70	542.30
Equity and cost investments	334.70	481.60
Property, plant and equipment, net	5,929.10	4,919.50
Deferred income taxes, net	134.70	795.40
Other long-term assets	412.20	362.80
Other intangible assets	1,042.20	441.40
Goodwill	3,541.60	1,539.20
TOTAL ASSETS	$        24,156.40	$        14,365.60
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$          1,179.30	$             782.50
Accrued liabilities	2,298.40	1,934.50
Insurance reserves	213.70	215.20
Stored value card liability and current portion of
deferred revenue	1,642.90	1,288.50
Current portion of long-term debt	349.90	-
Total current liabilities	5,684.20	4,220.70
Long-term debt	9,090.20	3,932.60
Deferred revenue	6,775.70	4.40
Other long-term liabilities	1,430.50	750.90
Total liabilities	22,980.60	8,908.60
Shareholders' equity:
Common stock ($0.001 par value) - authorized,
2,400.0 shares; issued and outstanding, 1,309.1 and
1,431.6 shares, respectively	1.30	1.40
Additional paid-in capital	41.10	41.10
Retained earnings	1,457.40	5,563.20
Accumulated other comprehensive loss	(330.30)	(155.60)
Total shareholders' equity	1,169.50	5,450.10
Noncontrolling interests	6.30	6.90
Total equity	1,175.80	5,457.00
TOTAL LIABILITIES AND EQUITY	$        24,156.40	$        14,365.60

-Did accounts receivable increase? -Did sales increase? Did plant, property, and equipment increase?

-What does this tell you about the company? Did sales increase or decrease? What about cost of sales? If you were going to look further into the company, what would you want to investigate?

Answer 1

Answer

Horizontal anal Horizontal analysis (also known as trend analysis) is a financial statement analysis technique that shows changes in the amounts of corresponding financial statement items over a period of time. It is a useful tool to evaluate the trend situations. The statements for two or more periods are used in horizontal analysis. The earliest period is usually used as the base period and the items on the statements for all later periods are compared with items on the statements of the base period. The changes are generally shown both in dollars and percentage e changes are com using the following formulas 1. Dollar changeAmount of the tem in comparison year Amount of the Rem in base year Dollar change 2 Amount of the tem in base year Jane Doe CORPORATION CONSOLIDATED BALANCE SHEETS (in millions, except per share data) Increase or (Decrease Amount Percentage Se 2018 ASSETS Current assets: Cash and cash equivalents Short-term investments Accounts receivable, net 8,756.30 255.61% 20.60% 6,294.00 228.60 870.40 1,364.00 181 693.10 1,400.50 1,462.80 12,494.20 177.30 36.50 1,104.70 7,210.80 274.60 Prepaid expenses and other current assets Total current assets Long-term investments Equity and cost investments Property, plant and equipment, net Deferred income taxes, net Other long-term assets Other intangible assets 308.49% 1 36.48% 50.64% 30. 50% 20.52% -83.07% 13.62% 136.11% 1,009.60 660.70 49.40 600.80 2,002.40 9,790.80 795.40 412.20 1,042.20 TOTAL ASSETS LIABILITIES AND EQUITY Current liabilities: 24.156.40 14,365.60 68.15% 1,179.30 2,298 782.50 1,934.50 215.20 payable 50.71% 18.81% -0.70% unts 396.80 Accrued liabilities Insurance reserves Stored value card liability and current portion of deferred revenue Current portion of long-term debt Total current liabilities Long-term debt Deferred revenue Other long-term liabilities Total liabilities Shareholders' equity Common stock ($0.001 par value) authorized 2,400.0 shares; issued and outstanding, 1,309.1 and 1,431.6 shares, respectively Additional paid-in capital Retained earnings Accumulated other comprehensive loss Total shareholders' equity Noncontrolling interests Total equity TOTAL LIABILITIES AND EQUITY 1. 1,288.50 354.40 5,684.20 9,090.20 6,775.70 1,430.50 22,980.60 4,220.70 3,932.60 1,463.50 5,157.60 6,771.30 34.67% 131.15% 153893.18% 90.50% 157.96% 750.90 8,908.60 1,457.40 (330.30) 1,169.50 5,563.20 5,450.10 5,457.00 4,105.80 174. 112.28% 78.54% 175 (4,281.20 9,790.80 78.45% 68.15% 14,365.60

Vertical analysis A vertical analysis is used to show the relative sizes of the different accounts on a financial statement. For example, when a vertical analysis is done on balance sheet statement, it will show the total assets and total liabilities and Equity number as 100%, and every other account will show as a percentage of the total assets number Jane Doe CORPORATION CONSOLIDATED BALANCE SHEETS (in millions, except per share data) Percentage of Oct 1, Total Assets ercen of Total Assets ASSETS Current assets: Cash and cash equivalents Short-term investments Accounts receivable, net Inventories Prepaid expenses and other current assets Total current asset:s Long-term investments Equity and cost investments Property Deferred income taxes, net 8,756.30 36.2% 2,462.30 870.40 1,364.00 1,400.50 1,462.80 12,494.20 5,283.40 36.8% 334.70 34.2% Other intangible assets 1,042.20 3,541.60 24,156.40 41.40 1,539.20 14,365.60 TOTAL ASSETS LIABILITIES AND EQUITY Current liabilities: Accounts payable Accrued liabilities Insurance reserves Stored value card liability and current portion of deferred revenue Current portion of long-term debt Total current liabilities Long-term debt Deferred revenue Other long-term liabilities Total liabilities Shareholders' equity: Common stock ($0.001 par value) authorized 2,400.0 shares; issued and outstanding, 1,309.1 and 1,431.6 shares, respectively Additional paid-in capital 100.0% 100.0% 1,179.30 2,298.40 213.70 782.50 1,934.50 215.20 13.5% 1.5% 1,642.90 1,288.50 5,684.20 9,090.20 6,775.70 1,430.50 22,980.60 4,220.70 3,932.60 50.90 8,908.60 62.0% 1,457.40 (330.30) 5,563.20 (155.60) 5,450.10 etained earnings Accumulated other comprehensive loss Total shareholders' equity Noncontrolling interests Total equity TOTAL LIABILITIES AND EQUITY 38.7% 1,175.80 24,156.40 5,457.00 14,365.60 38.0% 100.0% Did accounts receivable increase? Accounts receivable decreased by 20.37% in 2018 as compared to 2017. The percentage of Accounts receivable to total assets has also decreased from 6.1% to 2.9% Did sales increase? Difficult to comment as only balance sheet is provided. However, since accounts receivable has decreased, it may be due to decreased sales or better collection Did plant, property,and equipment increase? PPE increased by 20.52% in 2018 as compared to 2017. However, the percentage of PPE to total assets has decreased from 34.2% to 24.5% What does this tell you about the company? Did sales increase or decrease? What about cost of sales? If you were going to look further into t Balance in retained earnings has decreased in 2018 by 73.8% as compared to 2017 which indicates a loss in the current year. This could be trigred due to decreased sales or increased cost of goods sold. One need to analyse the variances in other cost items as well to ascertain the exact reasin of decrease in profits the company, What would you want to investigate?