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Financial Statement Analysis

Company A Balance Sheet 12/31/08 12/31/07

Assets:
Current assets:
Cash 14,000 12,458
Accounts Rec. 45,489 35,486
Inventory 39,239 32,568
Other 3,400 2,581
Total Current Assets 102,128 83,093
Long term investments 128,580 104,600
Property, plant & equip, net 789,145 771,258
Total assets 1,019,853 958,951

Liabilities and stockholders equity:
Current liabilities:
Accounts Payable 98,789 85,451
Other current liabilities 3,456 5,157
Total current liabilities 102,245 90,608
Long term debt 456,781 414,760
Total liabilities 559,026 505,368
Stockholders equity:
Common Stock 100,000 100,000
Additional paid in capital 275,000 275,000
Retained earnings 85,827 78,583
Total stockholders equity 460,827 453,583
Total liabilities and stockholders equity 1,019,853 958,951

Company A
Income Statement 12/31/08 12/31/07
Sales 2,281,789 2,074,354
Cost of Good Sold 1,505,981 1,348,330
Gross Profit 775,808 726,024
Operating expense 458,245 420,408
Income before interest tax 317,563 305,616
Interest expense 36,542 33,181
Earnings before tax 281,021 272,435
Tax expense 98,357 95,352
Net earnings 182,664 177,083

1. Prepare a horizontal analysis of Company A's balance Sheet.
2. Prepare a vertical analysis of Company A's income statements.

Assume that my company has 50,000 shares of common stock outstanding throughout 08, and that the ending market price is $43 per share. Calculate the following profitability ratios for 08 and 07(use ending balance sheet values):
A. earnings per share
B. price-earnings ratio
C. gross margin percentage
D. return on total assets
E. return on common stockholders equity

Also calculate the following turnover ratios for 07 and 08 using ending balance sheet balances:
A. Asset turnover
B. Accounts receivable turnover
C. Days sales in receivables
D. Inventory turnover
E. Days sales in inventory

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Solution Summary

The expert examines horizontal and vertical analysis for income statements.

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