Analysis of Financial Statements

Learning Target:
Perform vertical and horizontal analyses of
financial statement of a single proprietorship
(ABM_FABM12-Ig-h-13)
 Financial Analysis
• Is the use of company’s financial statements
to measure the entity’s financial position and
performance.
• Liquidity – pertains to the company’s ability to
meet its currently maturing obligations.
• Solvency – pertains to the company’s ability to
meet its long-term obligations
• Structure – pertains to the company’s
dependence on creditors or on own equity.
• Profitability – indicates measures on how well
a company performed in their operations.
 Horizontal Analysis
• Also known as Increase-Decrease method
compares financial data from two consecutive
periods.

Formula:
Current year – Base year = Difference
 Vertical Analysis
• Analyzes financial statement through finding
out the relationship between accounts within
a particular period.

Formula:
For SFP: Account/Total Assets=____x100=____%
For SCI: Account/Net Sales=____x100=____%
 Marupok Industries
Statement of Financial Position
December 31, 2018
Assets Percentage
Cash 200,000
Accounts Receivable 400,000
Inventory 250,000
Equipment 550,000
Total Assets:
Liabilities & Equity
Accounts Payable 300,000
Notes Payable 400,000
Marupok, Capital 700,000
Total Liabilities & Equity:
 Marupok Industries
Statement of Comprehensive Income
December 31, 2018

Percentage
Net Sales 900,000
CoGS 400,000
Gross Profit 250,000
Operating Expenses 500,000
Net Income 300,000
 Marupok Industries
Statement of Financial Position
December 31, 2017, and 2018

ASSETS 2017 2018 Diff

Current Assets
Cash 150,000 190,000 40,000
Account Receivables, net 75,000 102,000 27,000
Inventory 50,000 55,000 5,000
Short-term Investments 20,000 20,000 -
Prepaid Expenses 10,000 8,000 (2,000)
Total Current Assets 305,000 375,000 70,000
 2017 2018 Diff
Non-Current Assets
Land 800,000 800,000 -
Building, net 490,000 480,000 (10,000)
Machinery, net 295,000 290,000 (5,000)
Furniture and Fixtures, net 98,000 96,000 (2,000)
Long term Investments 100,000 80,000 (20,000)
Total Non-Current Assets 1,783,000 1,746,000 (37,000)

Total Assets 2,088,000 2,121,000 33,000

LIABILITIES & EQUITY 2017 2018 Diff
Current Liabilities
Accounts Payable 50,000 55,000 5,000
Short Term Liabilities 45,000 50,000 5,000
Total Current Liabilities 95,000 105,000 10,000
Non-Current Liabilities -
Long term Debts 120,000 100,000 -20,000
Bonds Payable 90,000 90,000 -00)
Total Non-Current Liabilities 210,000 190,000 -20,000

Total Liabilities 305,000 295,000 -10,000

Total Capital 1,783,000 1,826,000 43,000
Total Liabilities & Capital 2,088,000 2,121,000 33,000
 Marupok Industries
Statement of Comprehensive Income
For the year ended December 31, 2017,and 2018

2017 2018 Diff. %

Net sales 90,000 120,000 30,000 33.33%
CoGS 50,000 60,000 10,000 20.00%
Grs. Profit 40,000 60,000 20,000 50.00%
Admin.Exp 10,000 10,000 - 0.00%
Selling Exp 5,000 6,000 1,000 20.00%
Net Inc. 25,000 44,000 19,000 76.00%