Asked by Jordan Prather on May 10, 2024
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The comparative balance sheet of Nathan Company appears below: NATHAN COMPANY Comparative Balance Sheet December 31, Assets 20172016 Current assets $420$333 Plant assets 780567 Total assets $1,200690Liabilities and stockholders’ equityCurrent liabilities$168$144Long-term debt300162Common stock432306Retained earnings300288Total liabilities and stockholders’ equity$1,200$900\begin{array}{c}\text { NATHAN COMPANY}\\\text { Comparative Balance Sheet}\\\text { December 31,}\\\\\begin{array}{lcc} \text { Assets } & 2017 & 2016 \\ \text { Current assets } & \$ 420 & \$ 333 \\ \text { Plant assets } & 780 & 567 \\\text { Total assets } & \$ 1,200 & 690 \\\\\text {Liabilities and stockholders' equity}\\\text {Current liabilities}&\$168&\$144\\\text {Long-term debt}&300&162\\\text {Common stock}&432&306\\\text {Retained earnings}&300&288\\\text {Total liabilities and stockholders' equity}&\$1,200&\$900\end{array}\end{array} NATHAN COMPANY Comparative Balance Sheet December 31, Assets Current assets Plant assets Total assets Liabilities and stockholders’ equityCurrent liabilitiesLong-term debtCommon stockRetained earningsTotal liabilities and stockholders’ equity2017$420780$1,200$168300432300$1,2002016$333567690$144162306288$900 Instructions
(a) Using horizontal analysis show the percentage change for each balance sheet item using 2016 as a base year.
(b) Using vertical analysis prepare a common size comparative balance sheet.
Horizontal Analysis
A financial analysis technique that compares historical financial data over a sequence of reporting periods, using a base period to identify trends and growth patterns.
Vertical Analysis
A method of financial statement analysis in which each line item is listed as a percentage of a base figure, facilitating comparisons.
Comparative Balance Sheet
A financial statement that presents the financial position of a company at different points in time, side-by-side, to facilitate comparison.
- Realize the importance and methodologies involved in the scrutiny of comparative financial statements, including horizontal, vertical, and trend analyses.
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Learning Objectives
- Realize the importance and methodologies involved in the scrutiny of comparative financial statements, including horizontal, vertical, and trend analyses.
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