Anderson Tools Company: financial analysis and project outline

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Project Outline

Part 1: Summary in English- Translate B+S and I+S in general format

The balance sheet shows that there is an increase in cash and equivalents from 16.000 to 17,500, merchandise inventory from 54,300 to 61,100, and net tangible assets from 109,900 to 121,500 from the 2003 to 2004. However, there is a decrease in accounts receivable from 49,200 to 42,900. In summary, the total assets increased from 229,400 to 258.300.

In the liabilities side of the statement there is a marginal fall in accounts payable from 31,400 to 30,100, from the year 2003 to 2004. However, the notes payable have increased from 17,000 to 20,000. The current liabilities have increased from 48,400 to 50,000, and the retained earnings have increased from 46,000 to 73,200. This indicates that the company has had a good year, a profitable year. The long term borrowings and common stock have remained the same.

The income statement shows that the sales of the company have gone up from 2003 to 2004 that is from 585,000 to 530,000, the cost of goods sold have correspondingly gone up from 276,800 to 290,600. The cost of goods sold has taken into consideration the opening and closing inventory. Consequently, the gross profit has also gone up from 294,400 to 253,200. The net income before taxes has gone up from 68,500 to 92,900.

Part 2: Start analyzing the summary with comparative statement analysis for both B+S AND I+S (Horizontal Analysis)

In the balance sheet as far as the assets are concerned there is an increase in cash and equivalents by 9.40 percent, merchandise inventory by 12.50 percent and tangible assets by 24.50 percent. The increase in tangible assets by 24.50 %could mean there is an increase plant and machinery. The increase in the cash and equivalents has not been in proportion to the increase in the total assets. There is a fall in the accounts receivable. This is good short-term asset management. The accounts payable have gone down by 4.10 percent but the notes payable have gone up by 17.60. This matter needs to be looked into, as the increase in the notes payable is in excess of the increase of the total liabilities that is 12.60. Is the company trying to finance its short-term ...