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Finance Acitivity

The document contains horizontal and vertical analysis of the balance sheet and income statement of Norton Corporation for the years ending 2005 and 2004. Some key findings from the analysis include: - Total assets increased 15.46% from 2004 to 2005, with current assets increasing 32.65% and property/equipment increasing 12.11%. - Total liabilities decreased 6.67% while total stockholder's equity increased 30.22% from 2004 to 2005. - Net income increased 16.21% from 2004 to 2005 as sales increased 9.78% and costs increased less than sales. - Various financial ratios like debt to equity, inventory turnover, average collection period, and acid test ratio are calculated for 2005

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Diana Rio
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17 views

Finance Acitivity

The document contains horizontal and vertical analysis of the balance sheet and income statement of Norton Corporation for the years ending 2005 and 2004. Some key findings from the analysis include: - Total assets increased 15.46% from 2004 to 2005, with current assets increasing 32.65% and property/equipment increasing 12.11%. - Total liabilities decreased 6.67% while total stockholder's equity increased 30.22% from 2004 to 2005. - Net income increased 16.21% from 2004 to 2005 as sales increased 9.78% and costs increased less than sales. - Various financial ratios like debt to equity, inventory turnover, average collection period, and acid test ratio are calculated for 2005

Uploaded by

Diana Rio
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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RIO, DIANA ROSE C.

FINMGT 1203
HORIZONTAL ANALYSIS

NORTON CORPORATION

Balance Sheet

December 31

Increase (Decrease)

2005 2004 Amount %

Assets

Current Assets

Cash $ 30, 000 $ 20,000 $ 10,000 50

Account Receivable 20,000 17,000 3,000 17.65

Inventory 12,000 10,000 2,000 20

Prepaid Expresses 3,000 2,000 1,000 50

Total Current Assets 65,000 49,000 16,000 32.65

Property and Equipment

Land 165,000 123,000 42,000 34.15

Building and Equipment 116,000 128,000 (11,610) 9.07

Total Property and Equipment 281,000 251,000 30,390 12.11

Total Assets 346,390 300,000 46, 390 15.46

Liabilities and Stockholder’s Equity

Current Liabilities

Account Payable $ 39,000 40,000 (1,000) 2.5

Notes Payable, Short term 3,000 2,000 1,000 50

Total Current Liabilities 42,000 42,000 0 0

Long-term Liabilities

Notes payable, long term 70,000 78,000 (8,000) 10.25

Total Liabilities 112,000 120,000 (8,000) 6.67

Stockholder’s Equity;
Common Stock, $1 Per Value 27,400 17,000 10,000 58.82

Addition [aid-in capital 158,100 113,000 45,000 39.91

Total paid-in capital 185,500 130,000 55,500 42.69

Retained earning 48,890 50,000 (1,110) 2.22

Total stockholder’s Equity 234, 390 180,000 54,390 30.22

Total Liabilities and $ 346,390 $ 300,000 $ 46,390 15.46

Stockholder Equity
VERTICAL ANALYSIS
NORTON CORPORATION

Balance Sheet

December 31

Common-Size

Percentage

2005 2004 2005 2004

Assets

Current Assets

Cash $ 30, 000 $ 20,000 8.66 6.67

Account Receivable 20,000 17,000 5.77 5.67

Inventory 12,000 10,000 3.46 3.33

Prepaid Expresses 3,000 2,000 0.87 0.67

Total Current Assets 65,000 49,000 18.76 16.33

Property and Equipment

Land 165,000 123,000 47.63 41

Building and Equipment 116,000 128,000 33.60 42.67

Total Property and Equipment 281,000 251,000 81.24 83.67

Total Assets 346,390 300,000 100.0 100.0

Liabilities and Stockholder’s Equity

Current Liabilities

Account Payable $ 39,000 40,000 11.26 13.33

Notes Payable, Short term 3,000 2,000 0.87 0.67

Total Current Liabilities 42,000 42,000 12.13 14

Long-term Liabilities

Notes payable, long term 70,000 78,000 20.21 26

Total Liabilities 112,000 120,000 32.33 40

Stockholder’s Equity;

Common Stock, $1 Per Value 27,400 17,000 7.91 5.67

Addition [aid-in capital 158,100 113,000 45.64 37.67

Total paid-in capital 185,500 130,000 53.55 43.33


Retained earning 48,890 50,000 14.11 16.67

Total stockholder’s Equity 234, 390 180,000 67.67 60

Total Liabilities and $ 346,390 $ 300,000 100.0 100.0

Stockholder Equity
RIO, DIANA ROSE C.
FINMGT 1203
HORIZONTAL ANALYSIS

NORTON CORPORATION

Income Statement

For the Years Ended of December 31

Increase (Decrease)

2005 2004 Amount %

Sales $ 494,000 $ 450,000 $ 44,000 9.78

Cost of Goods Sold 140,000 127,000 13,000 10.24

Gross Margin 354,000 323,000 31,000 9.60

Operating Expenses 270,000 249,000 21,000 8.43

Net Operating Income 84,000 74,000 10,000 13.51

Interest expense 7,300 8,000 (700) 8.75

Net Income before taxes 76,700 66,000 10,700 16.21

Less Income taxes (30%) 23,010 19,800 3,210 16.21

Net Income 53,690 46,200 7,490 16.21


VERTICAL ANALYSIS

NORTON CORPORATION

Income Statement

For the Years Ended of December 31

Common-Size

Percentages

2005 2004 2005 2004

Sales $ 494,000 $ 450,000 100.0 100.0

Cost of Goods Sold 140,000 127,000 28.34 28.22

Gross Margin 354,000 323,000 71.66 71.78

Operating Expenses 270,000 249,000 54.66 55.33

Net Operating Income 84,000 74,000 17.0 16.44

Interest expense 7,300 8,000 1.48 1.78

Net Income before taxes 76,700 66,000 15.53 14.67

Less Income taxes (30%) 23,010 19,800 4.66 4.4

Net Income 53,690 46,200 10.87 10.27


RIO, DIANA ROSE C.
FINMGT 1203

2005
Total Liabilities
 DEBT TO EQUITY RATIO =
Stockholder’s Equity

112,000
= = 0. 48
234,390

2004
Total Liabilities
 DEBT TO EQUITY RATIO =
Stockholder’s Equity

120,000
= = 0. 4
300,000

Cost Good Sold


 INVENTORY TURNOVER =
Average Inventory

140,000 140,000
= = 12.73
(12,000 + 10,000) 11,000

365 Days
 AVEARGE SALE PERIOD =
Inventory Turnover

365 Days
= = 28.67 days

12.73
365 Days
 AVERAGE COLLECTION PERIOD =
Account Receivable Turnover

365 Days
= = 13.67 days

26.70 times
Sales on Account
 AVEARGE RECEIVABLE TURNOVER =
Average Account Receivable

494,000
= / 2 = 26.70 times

(17,000 + 20,000)
2005
Quick Assets
 ACID TEST (QUICK/RATIO) =
Current Liabilities

50,000
= = 1.19

42,000
2004
Quick Assets
 ACID TEST (QUICK/RATIO) =
Current Liabilities

37,000
= = 0.88

42,000
2005
Current Assets
 CURRENT RATIO =
Current Liabilities

65,000
= = 1.55

42,000
2004
Current Assets
 CURRENT RATIO =
Current Liabilities

49,000
= = 1.17

42,000

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