The condensed financial statements of Leeward Corporation for 2006 and 2005 are presented below.
Leeward Corporation Leeward Corporation
Balance Sheet Income Statement
December 31, 2006 For the Year Ended December 31, 2006
Assets Revenues $2,500,000
Current assets Expenses
Cash and temporary Cost of goods sold 1,080,000
investments $ 50,000 Selling and administrative
Accounts receivable 70,000 expenses 495,000
Inventories 120,000 Interest expense 30,000
Total current assets 240,000 Total expenses 1,605,000
Property, plant, and Income before income taxes 895,000
equipment (net) 780,000 Income tax expense 268,500
Total assets $1,020,000 Net income $ 626,500
Liabilities and Stockholders’ Equity
Current liabilities $ 100,000
Long-term liabilities 300,000
Common stockholders’ equity 620,000
Total liabilities and
stockholders’ equity $1,020,000
Leeward Corporation Leeward Corporation
Balance Sheet Income Statement
December 31, 2005 For the Year Ended December 31, 2005
Assets Revenues $2,500,000
Current assets Expenses
Cash and temporary Cost of goods sold 1,750,000
investments $ 40,000 Selling and administrative
Accounts receivable 90,000 expenses 500,000
Inventories 150,000 Interest expense 30,000
Total current assets 280,000 Total expenses 2,280,000
Property, plant, and Income before income taxes 220,000
equipment (net) 800,000 Income tax expense 66,000
Total assets $1,080,000 Net income $ 154,000
Liabilities and Stockholders’ Equity
Current liabilities $ 140,000
Long-term liabilities 320,000
Common stockholders’ equity 620,000
Total liabilities and
stockholders’ equity $1,080,000
Instructions
1. Compute the following listed ratios for 2006.
(a) Current ratio = .
(b) Debt to total assets = .
(d) Profit margin ratio = .
(e) Return on common stockholders’ equity = .
(f) Return on assets = .
2. Perform horizontal analysis on both the balance sheet and income statement.
Leeward Corporation
Balance Sheet
Horizontal Analysis
2006 2005 Change Percent
Assets
Cash and temporary investments $50,000 $40,000
Accounts receivable $70,000 $90,000
Inventories $120,000 $150,000
Total current assets $240,000 $280,000
Property, plant and equipment $780,000 $800,000
Total assets $1,020,000 $1,080,000
Liabilities & Stockholder’s Equity
Current liabilities $100,000 $140,000
Long-term liabilities $300,000 $320,000
Common stockholder’s equity $620,000 $620,000
Total liabilities and stockholder’s equity $1,020,000 $1,080,000
Leeward Corporation
Income Statement
Horizontal Analysis
2006 2005 Change Percent
Revenues $2,500,000 $2,500,000
Expenses
Cost of goods sold $1,080,000 $1,750,000
Selling & administrative expense $495,000 $500,000
Interest expense $30,000 $30,000
Total Expenses $1,605,000 $2,280,000
Income before income taxes $895,000 $220,000
Income tax expense $268,500 $66,000
Net Income $626,500 $154,000
3. Perform vertical analysis on both the balance sheet and income statement for 2005 and 2006.
Leeward Corporation
Balance Sheet
Vertical Analysis
2006 2005
Amount Percent Amount Percent
Assets
Cash and temporary investments $50,000 $40,000
Accounts receivable $70,000 $90,000
Inventories $120,000 $150,000
Total current assets $240,000 $280,000
Property, plant and equipment $780,000 $800,000
Total assets $1,020,000 $1,080,000
Liabilities & Stockholder’s Equity
Current liabilities $100,000 $140,000
Long-term liabilities $300,000 $320,000
Common stockholder’s equity $620,000 $620,000
Total liabilities and stockholder’s equity $1,020,000 $1,080,000
Leeward Corporation
Income Statement
Vertical Analysis
2006 2005
Amount Percent Amount Percent
Revenues $2,500,000 $2,500,000
Expenses
Cost of goods sold $1,080,000 $1,750,000
Selling & administrative expense $495,000 $500,000
Interest expense $30,000 $30,000
Total Expenses $1,605,000 $2,280,000
Income before income taxes $895,000 $220,000
Income tax expense $268,500 $66,000
Net Income $626,500 $154,000
4. Assess the financial performance of Leeward, using your analysis in #2 and #3 above. How have things changed from 2005 to 2006?
5. If the company wanted to perform industry comparison analysis, what references would you recommend it use?
Essay Writing Service Features
Our Experience
No matter how complex your assignment is, we can find the right professional for your specific task. Achiever Papers is an essay writing company that hires only the smartest minds to help you with your projects. Our expertise allows us to provide students with high-quality academic writing, editing & proofreading services.
Free Features
Free revision policy
$10Free bibliography & reference
$8Free title page
$8Free formatting
$8How Our Dissertation Writing Service Works
First, you will need to complete an order form. It's not difficult but, if anything is unclear, you may always chat with us so that we can guide you through it. On the order form, you will need to include some basic information concerning your order: subject, topic, number of pages, etc. We also encourage our clients to upload any relevant information or sources that will help.
Complete the order form
Once we have all the information and instructions that we need, we select the most suitable writer for your assignment. While everything seems to be clear, the writer, who has complete knowledge of the subject, may need clarification from you. It is at that point that you would receive a call or email from us.
Writer’s assignment
As soon as the writer has finished, it will be delivered both to the website and to your email address so that you will not miss it. If your deadline is close at hand, we will place a call to you to make sure that you receive the paper on time.
Completing the order and download