Lincoln Com pany Comparative Income Statement Decem ber 31. 2003 and 2002 Increase( Decrease) 2003 2002 Amount Percent Sales $1,530,500$1,234,000$296,50024.0% Sales returns 32.500 34,000(1,500)(4.4%) Net sales $1,498,000$1,200,000$29800)24.8% Cost of goods sold Gross profit Horizontal Analysis Selling expenses Current year(2003)$1,498,000=124.8% Administrative expenses Base year(2002) $1,200,000 Total operating expenses Operating income Increase amount $298,000 24.8% Other income Base year(2002)$1,200,000 other expense 6,00012,000 (6,000)(50.0% Income before income tax 162, 500 $ 134, 600 27, 900 20.7% Income tax 71,500 58,100 13,40023.1% Net income 91,000$762500$1450019.0% c15-6
C15- 6 Lincoln Company Comparative Income Statement December 31, 2003 and 2002 Sales $1,530,500 $1,234,000 $296,500 24.0% Sales returns 32,500 34,000 (1,500) (4.4%) Net sales $1,498,000 $1,200,000 $298,000) 24.8% Cost of goods sold 1,043,000 820,000 223,000 27.2% Gross profit $ 455,000 $ 380,000 $ 75,000 19.7% Selling expenses $ 191,000 $ 147,000 $ 44,000 29.9% Administrative expenses 104,000 97,400 6,600 6.8% Total operating expenses $ 295,000 $ 244,400 $ 50,600 20.7% Operating income $ 160,000 $ 135,600 $ 24,400 18.0% Other income 8,500 11,000 (2,500) (22.7%) $ 168,500 $ 146,600 $ 21,900 14.9% Other expense 6,000 12,000 (6,000) (50.0%) Income before income tax $ 162,500 $ 134,600 $ 27,900 20.7% Income tax 71,500 58,100 13,400 23.1% Net income $ 91,000 $ 76,500 $ 14,500 19.0% Increase (Decrease) 2003 2002 Amount Percent Horizontal Analysis: Current year (2003) $1,498,000 Base year (2002) $1,200,000 = 124.8% Increase amount $298,000 Base year (2002) $1,200,000 = 24.8%
Lincoln Com pany Comparative Balance Sheets December 31. 2003 Decem ber 31. 2002 Assets Amount percent Amount percent Current assets $550,00048.3%$533,00043.3% Long-term investments 95,0008.3 177,50014.4 Fixed assets(net) 44450039.0 470,00038.2 Intangible assets 50,00044 50,0004.1 $1139,500100.0%$1,230,500100.0% Liabilities Current liabilities $210,00018.4%$243,000197% Long-term liabilities 1000088200,00016.3 $310,00027.2%$44300036.0% Stockholders'Equity Preferred stock,$100par$150,00013.2%$150,000122% Common stock, $10 par 50000043.9 500.00040.6 Retained earnings 17950015.7 137,50011.2 $829,500728%$787,50064.0% 1139500100.0%$1230500100.0% c15-7
C15- 7 Lincoln Company Comparative Balance Sheets Assets Current assets $ 550,000 48.3% $ 533,000 43.3% Long-term investments 95,000 8.3 177,500 14.4 Fixed assets (net) 444,500 39.0 470,000 38.2 Intangible assets 50,000 4.4 50,000 4.1 $1,139,500 100.0% $1,230,500 100.0% Liabilities Current liabilities $ 210,000 18.4% $ 243,000 19.7% Long-term liabilities 100,000 8.8 200,000 16.3 $ 310,000 27.2% $ 443,000 36.0% Stockholders’ Equity Preferred stock, $100 par $ 150,000 13.2% $ 150,000 12.2% Common stock, $10 par 500,000 43.9 500,000 40.6 Retained earnings 179,500 15.7 137,500 11.2 $ 829,500 72.8% $ 787,500 64.0% $1,139,500 100.0% $1230,500 100.0% December 31, 2003 December 31, 2002 Amount Percent Amount Percent
Lincoln Com pany Comparative Balance Sheets December 31. 2003 Decem ber 31. 2002 Assets Amount percent Amount percent Current assets $550,00048.3%$533,00043.3% Long-term investments 95,0008.3 177,50014.4 Fixed assets(net) 44450039.0 470,00038.2 Intangible assets 50,00044 50,0004.1 $1139,500100.0%$1,230,500100.0% Liabilities Current liabilities $210,00018.4%$243,00019.7% 200,000163 Vertical Analysis: $443,00036.0% Current liabilities $210,000 =18.4% $150,000122% Total assets $1, 139, 500 500.00040.6 137,50011.2 829500728%$787,500640% 1139500100.0%$1230500100.0% c15-8
C15- 8 Lincoln Company Comparative Balance Sheets Assets Current assets $ 550,000 48.3% $ 533,000 43.3% Long-term investments 95,000 8.3 177,500 14.4 Fixed assets (net) 444,500 39.0 470,000 38.2 Intangible assets 50,000 4.4 50,000 4.1 $1,139,500 100.0% $1,230,500 100.0% Liabilities Current liabilities $ 210,000 18.4% $ 243,000 19.7% Long-term liabilities 100,000 8.8 200,000 16.3 $310,000 27.2% $ 443,000 36.0% Stockholders’ Equity Preferred stock, $100 par $ 150,000 13.2% $ 150,000 12.2% Common stock, $10 par 500,000 43.9 500,000 40.6 Retained earnings 179,500 15.7 137,500 11.2 $829,500 72.8% $787,500 64.0% $1,139,500 100.0% $1230,500 100.0% December 31, 2003 December 31, 2002 Amount Percent Amount Percent Vertical Analysis: Current liabilities $210,000 Total assets $1,139,500 = 18.4%
Lincoln Company Comparative Balance sheets December 31. 2003 Decem ber 31. 2002 Assets Amoun Common-Size Statements Current assets $550000483%$533000433% Long-term investments 950008.3 177,500144 Fixed assets(net) 444,500390 470,000382 Intangible assets 5000044 50,000 4.1 $1,139500100.0%$1,230,500100.0% Liabilities Current liabilities $210,000184%$243,00019.7% Long-term liabilities 100,00088 200,00016.3 $310000272%$443,000360% Stockholders'Equity Preferred stock,$100pa$15000013.,2%$15000122% Common stock, $10 par 500000439 500000406 Retained earnings 179,500157 137,50011.2 829500728%$787,500640% $1139500100.0%$1230500100.0% c15-9
C15- 9 Lincoln Company Comparative Balance Sheets Assets Current assets $ 550,000 48.3% $ 533,000 43.3% Long-term investments 95,000 8.3 177,500 14.4 Fixed assets (net) 444,500 39.0 470,000 38.2 Intangible assets 50,000 4.4 50,000 4.1 $1,139,500 100.0% $1,230,500 100.0% Liabilities Current liabilities $ 210,000 18.4% $ 243,000 19.7% Long-term liabilities 100,000 8.8 200,000 16.3 $310,000 27.2% $ 443,000 36.0% Stockholders’ Equity Preferred stock, $100 par $ 150,000 13.2% $ 150,000 12.2% Common stock, $10 par 500,000 43.9 500,000 40.6 Retained earnings 179,500 15.7 137,500 11.2 $829,500 72.8% $787,500 64.0% $1,139,500 100.0% $1230,500 100.0% December 31, 2003 December 31, 2002 Amount Percent Common-Size Statements Amount Percent
Solvency Analysis financial obligations(debts)as they are due U Solvency is the ability of a business to meet its Solvency analysis focuses on the ability of a business to pay or otherwise satisfy its current and noncurrent liabilities This ability is normally assessed by examining balance sheet relationships c15-10
C15- 10 Solvency Analysis Solvency is the ability of a business to meet its financial obligations (debts) as they are due. Solvency analysis focuses on the ability of a business to pay or otherwise satisfy its current and noncurrent liabilities. This ability is normally assessed by examining balance sheet relationships