Vertical Analysis 0182017 20182017 Consolidated Balance Sheets (USD Cash and cas
ID: 2411657 • Letter: V
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Vertical Analysis 0182017 20182017 Consolidated Balance Sheets (USD Cash and cash equivalents 1,172 5,178 s,027 2,511 10% w plant, and equipment, net 9,329 ,229 Total curent labilities 29% 13% 123% -9% 9,723 on/retirement 15,15 15,705 14,456 Total shareholders' equity Total liabilities and shareholders equity Heaith CeIncome Statement 2012017 2018 2017 16,99916.184 15,308 24% 24% 4% 5% Gross margin 1% 3,857 1401472 3,806 5,987 5,537 9% 150% Seling, general, and edministrative espense income from operations before tax expense 4,460 4,145 ,664 2,562 2.267 NG Make an estimate of tax expense for 2018. Use the 2018 earnings from operations and apply the current federal statutory rate of 21% to make your estimate. Make an estimate of sales for 2018, Assume that you expect sales to decrease by 3% compared to 2017 Consider the information about Health Co's environment. Please make an estimate of cost of sales for the unaudited year 2018. Start by considering the ratio of cost of sales to sales in 2017. Assume that increased labor prices will increase the ratio of cost of sales to sales by an amount of 7% over the 2017 year. Then use this ratio to predict the cost of sales amount based on your estimate of sales in #2 above. Prepare an estimate of research and development costs. a 12% increase from the prior year. What is the percent increase or decrease in net income from 2017 to 2018? This is horizontal analysis. What is the percentage of net income to sales for 2017 and 2018? This is vertical analysis. What is the inventory turn ratio for 2017 and 2018? What is the debt to equity ratio for 2018? 1. 2. 3. 4. Estimate an amount for 2018 based or 5. 6. 7. 8.Explanation / Answer
1. Estimated tax expense = $ 4,460 x 21 % = $ 936.60.
2. Estimated sales for 2018 = 2017 Sales x 97 % = $ 16,184 x 97 % = $ 15,698.48
3. Ratio of Cost of Sales to Sales in 2017 = $ 3,889 / $ 16,184 = 0.240299 or 24.03 %.
2018 Cost of Sales = $ 3,889 x 107 % = $ 4,161.23
Ratio of Cost of Sales to Sales in 2018 = $ 4,161.23 / $ 15,698.48 = 0.26507 or 26.51 %.
4. Research and deveopment costs for 2018 = $ 1,490 x 112 % = $ 1,668.80
5. Net Income of 2018 = [$ 15,698.48 - $ 4,161.23 - $ 1,668.80 - $ 3,806 - $ 68 - $ 605 - $ 151 ] x ( 1 - 0.21) = $ 4,138.38
Percentage increase (decrease) over 2017 = $ ( 4,138.38 - 3,415) / $ 3,415 = 0.2118 or 21.18 %.
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