Learning Objectives

Analysis of Financial Statements



How financial ratio analysis helps managers assess the firm s health. Compute profitability, liquidity, debt, asset activity, and market value ratios. Compare financial information over time and among companies.
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Ratio Analysis


Ratio Analysis
Five Categories of Ratios
    

Financial managers use ratios to interpret the raw numbers on financial statements. Relative measures allow comparison over time and to other firms. Ratios are used by financial managers, other business managers, creditors, and investors.
Link to Company Research Link to Wall Street Research Net
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Profitability ratios Liquidity ratios Debt ratios Asset activity ratios Market value ratios

Link to 10k Wizard Home Page: info on financial reports and SEC filings Link to Financial Research
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Ratio Analysis
Profitability Ratios


Ratio Analysis
Profitability Ratios
Gross Profit Sales

Measure the overall effectiveness of the firm s management.

Gross Profit Margin =

How effective is the firm at generating revenue in excess of its cost of goods sold?
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Balance Sheet Excalibur Corporation Cash $175 Accounts Receivable 430 Inventories 625 Current Assets $1,230 Plant & Equipment $2,500 Less:Acc. Depr. (1,200) Net Fixed Assets $1,300 Total Assets $2,530 Income Statement Excalibur Corporation Sales $1,450 Cost of Goods Sold 875 Gross Profit $575 Operating Expenses 45 Depreciation 200 Net Operating Income $330 Interest Expense 60 Income Before Taxes $270 Taxes (40%) 108 Net Income $162 Common Dividends Paid 100 Addition to Retained Earnings $62 Accounts Payable $115 S-T Notes Payable 115 Current Liabilities $230 Bonds $600 Owners Equity Common Stock $300 Capital in Excess of Par 600 Retained Earnings 800 Total Owners Equity $1,700 Total Liabilities and Owners Equity $2,530

Ratio Analysis
Profitability Ratios
Operating Profit Margin = Operating Income Sales

Gross Profit Margin

Gross Profit Sales $575 $1,450 = 39.7%

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How effective is the firm in keeping costs of production low?

Gross Profit Margin =

Balance Sheet Excalibur Corporation Cash $175 Accounts Receivable 430 Inventories 625 Current Assets $1,230 Plant & Equipment $2,500 Less:Acc. Depr. (1,200) Net Fixed Assets $1,300 Total Assets $2,530 Income Statement Excalibur Corporation Sales $1,450 Cost of Goods Sold 875 Gross Profit $575 Operating Expenses 45 Depreciation 200 Operating Income $330 Interest Expense 60 Income Before Taxes $270 Taxes (40%) 108 Net Income $162 Common Dividends Paid 100 Addition to Retained Earnings $62 Accounts Payable $115 S-T Notes Payable 115 Current Liabilities $230 Long-term Debt $600 Owners Equity Common Stock $300 Capital in Excess of Par 600 Retained Earnings 800 Total Owners Equity $1,700 Total Liabilities and Owners Equity $2,530

Ratio Analysis
Profitability Ratios
Note: Net Income equals Earnings Available to CS when there is no preferred stock.

Operating Profit = Margin

Operating Income Sales $330 $1,450 = 22.8%

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Net Profit Margin =

Net Income Sales

Oper. Profit Margin =

How much net profit is being generated from each dollar of sales?

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Balance Sheet Excalibur Corporation Liabilities Cash $175 Accounts Payable $115 Accounts Receivable 430 S-T Notes Payable 115 Inventories 625 Current Liabilities $230 Current Assets $1,230 Long-term Debt $600 Plant & Equipment $2,500 Owners Equity Less:Acc. Depr. (1,200) Common Stock $300 Net Fixed Assets $1,300 Capital in Excess of Par 600 Total Assets $2,530 Retained Earnings 800 Total Owners Equity $1,700 Income Statement Total Liabilities and Excalibur Corporation Owners Equity $2,530 Sales $1,450 Assets Cost of Goods Sold 875 Gross Profit $575 Operating Expenses 45 Depreciation 200 Operating Income $330 Interest Expense 60 Income Before Taxes $270 Taxes (40%) 108 Net Income $162 Common Dividends Paid 100 Addition to Retained Earnings $62

Ratio Analysis
Profitability Ratios
Return on Assets = Net Income Total Assets

Net Profit Margin

Net Income Sales $162 $1,450 = 11.2%

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How effectively is the firm generating net income from its assets ?
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Net Profit Margin =

Balance Sheet Excalibur Corporation Liabilities Cash $175 Accounts Payable $115 Accounts Receivable 430 S-T Notes Payable 115 Inventories 625 Current Liabilities $230 Current Assets $1,230 Long-term debt $600 Plant & Equipment $2,500 Owners Equity Less:Acc. Depr. (1,200) Common Stock $300 Net Fixed Assets $1,300 Capital in Excess of Par 600 Total Assets $2,530 Retained Earnings 800 Total Owners Equity $1,700 Total Liabilities and Income Statement Owners Equity $2,530 Excalibur Corporation Sales $1,450 Cost of Goods Sold 875 Gross Profit $575 Operating Expenses 45 Net Income Return on Depreciation 200 = Operating Income $330 Total Assets Assets Interest Expense 60 Income Before Taxes $270 Taxes (40) 108 $162 Net Income% $162 ROA = $2,530 = 6.4% 13 Common Dividends Paid 100 Addition to Retained Earnings $62 Assets

Ratio Analysis
Profitability Ratios
Net Income Common Equity

Return on Equity =

How well is the firm generating return to its equity providers?

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Balance Sheet Excalibur Corporation Liabilities Cash $175 Accounts Payable $115 Accounts Receivable 430 S-T Notes Payable 115 Inventories 625 Current Liabilities $230 Current Assets $1,230 Long-term Debt $600 Plant & Equipment $2,500 Owners Equity Less:Acc. Depr. (1,200) Common Stock $300 Net Fixed Assets $1,300 Capital in Excess of Par 600 Total Assets $2,530 Retained Earnings 800 Total Owners Equity $1,700 Income Statement Total Liabilities and Excalibur Corporation Owners Equity $2,530 Sales $1,450 Assets Cost of Goods Sold 875 Gross Profit $575 Operating Expenses 45 Depreciation 200 Operating Income $330 Interest Expense 60 Income Before Taxes $270 Taxes (40%) 108 Net Income $162 Common Dividends Paid 100 Addition to Retained Earnings $62

Ratio Analysis
Liquidity Ratios


Measure the ability of the firm to meet its short-term financial obligations. shortCurrent Assets Current Liabilities

Current Ratio =
Return on Equity = Net Income Common Equity

ROE = $162 $1,700

= 9.53%
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Are there sufficient current assets to pay off current liabilities? What is the cushion of safety?

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Balance Sheet Excalibur Corporation Liabilities Cash $175 Accounts Payable $115 Accounts Receivable 430 S-T Notes Payable 115 Inventories 625 Current Liabilities $230 Current Assets $1,230 Long-term Debt $600 Plant & Equipment $2,500 Owners Equity Less:Acc. Depr. (1,200) Common Stock $300 Net Fixed Assets $1,300 Capital in Excess of Par 600 Total Assets $2,530 Retained Earnings 800 Total Owners Equity $1,700 Total Liabilities and Owners Equity $2,530 Assets

Ratio Analysis
Liquidity Ratios


Measure the ability of the firm to meet its short-term financial obligations. shortCurrent Assets - Inventory Current Liabilities

AcidAcid-Test Ratio =

Current Ratio =

Current Assets Current Liabilities

Current Ratio = $1,230 = 5.35x $230

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What happens to the firms ability to repay current liabilities after what is usually the least liquid of the current assets is subtracted?
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Balance Sheet Excalibur Corporation Liabilities Cash $175 Accounts Payable $115 Accounts Receivable 430 S-T Notes Payable 115 Inventories 625 Current Liabilities $230 Current Assets $1,230 Long-term Debt $600 Plant & Equipment $2,500 Owners Equity Less:Acc. Depr. (1,200) Common Stock $300 Net Fixed Assets $1,300 Capital in Excess of Par 600 Total Assets $2,530 Retained Earnings 800 Total Owners Equity $1,700 Total Liabilities and Owners Equity $2,530 Assets

Ratio Analysis
Debt Ratios


Acid-Test Ratio =

Current Assets - Inventory Current Liabilities

Measure the relative size of the firm s debt load and the firm s ability to pay off the debt.

Acid-Test Ratio =

$1,230 -$625 = 2.63x $230

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Ratio Analysis
Debt Ratios
Debt Ratio = Total Debt Total Assets

Balance Sheet Excalibur Corporation Liabilities Cash $175 Accounts Payable $115 Accounts Receivable 430 S-T Notes Payable 115 Inventories 625 Current Liabilities $230 Current Assets $1,230 Long-term Debt $600 Plant & Equipment $2,500 Owners Equity Less:Acc. Depr. (1,200) Common Stock $300 Net Fixed Assets $1,300 Capital in Excess of Par 600 Total Assets $2,530 Retained Earnings 800 Total Owners Equity $1,700 Income Statement Total Liabilities and Excalibur Corporation Owners Equity $2,530 Sales $1,450 Assets Cost of Goods Sold 875 Gross Profit $575 Operating Expenses 45 Depreciation 200 Operating Income $330 Interest Expense 60 Income Before Taxes $270 Taxes (40%) 108 Net Income $162 Common Dividends Paid 100 Addition to Retained Earnings $62

What proportion of the firms assets is financed with debt?

Debt Ratio =

Total Debt Total Assets

Debt Ratio = $230 + $600 = 33% $2,530

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Ratio Analysis
Debt Ratios
Total Debt Debt to = Common Equity Equity Ratio What is the proportion of debt relative to equity financing for the firm?

Balance Sheet Excalibur Corporation Liabilities Cash $175 Accounts Payable $115 Accounts Receivable 430 S-T Notes Payable 115 Inventories 625 Current Liabilities $230 Current Assets $1,230 Long-term Debt $600 Plant & Equipment $2,500 Owners Equity Less:Acc. Depr. (1,200) Common Stock $300 Net Fixed Assets $1,300 Capital in Excess of Par 600 Total Assets $2,530 Retained Earnings 800 Total Owners Equity $1,700 Income Statement Total Liabilities and Excalibur Corporation Owners Equity $2,530 Sales $1,450 Assets Cost of Goods Sold 875 Gross Profit $575 Operating Expenses 45 Depreciation 200 Operating Income $330 Interest Expense 60 Income Before Taxes $270 Taxes (40%) 108 Net Income $162 Common Dividends Paid 100 Addition to Retained Earnings $62

Debt to Equity Ratio

Total Debt Common Equity

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D/E = $230 + $600 = 48.8% $1,700 24

Ratio Analysis
Debt Ratios
Operating Income Interest Expense

Times Interest Earned Ratio =

What is the firms ability to repay interest payments from its operating income?
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Balance Sheet Excalibur Corporation Liabilities Cash $175 Accounts Payable $115 Accounts Receivable 430 S-T Notes Payable 115 Inventories 625 Current Liabilities $230 Current Assets $1,230 Long-term Debt $600 Plant & Equipment $2,500 Owners Equity Less:Acc. Depr. (1,200) Common Stock $300 Net Fixed Assets $1,300 Capital in Excess of Par 600 Total Assets $2,530 Retained Earnings 800 Total Owners Equity $1,700 Income Statement Excalibur Corporation Total Liabilities and Owners Equity $2,530 Sales $1,450 Cost of Goods Sold 875 Gross Profit $575 Operating Expenses 45 Depreciation 200 Times Operating Income Operating Income $330 Interest = Interest Expense 60 Interest Expense Earned Ratio Income Before Taxes $270 Taxes (40%) 108 $330 Net Income $162 TIE Ratio = = 5.50x Common Dividends Paid 100 $60 Addition to Retained Earnings $62 Assets
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Ratio Analysis
Asset Activity Ratios


Ratio Analysis
Asset Activity Ratios

Help assess how effectively the firm is using assets to generate sales.

Average Collection Period = Accounts Receivable Avg. Daily Credit Sales How long does it take for the firm on average to collect its credit sales from customers?
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Additional Info: We assume all sales are credit sales.

Balance Sheet Excalibur Corporation Liabilities Cash $175 Accounts Payable $115 Accounts Receivable 430 S-T Notes Payable 115 Inventories 625 Current Liabilities $230 Current Assets $1,230 Bonds $600 Plant & Equipment $2,500 Owners Equity Less:Acc. Depr. (1,200) Common Stock $300 Net Fixed Assets $1,300 Capital in Excess of Par 600 Total Assets $2,530 Retained Earnings 800 Total Owners Equity $1,700 Income Statement Total Liabilities and Excalibur Corporation Owners Equity $2,530 Sales $1,450 Assets Cost of Goods Sold 875 Gross Profit $575 Operating Expenses 45 Depreciation 200 Operating Income $330 Interest Expense 60 Income Before Taxes $270 Taxes (40%) 108 Net Income $162 Common Dividends Paid 100 Addition to Retained Earnings $62

Ratio Analysis
Asset Activity Ratios

Average Accounts Receivable Collection = Avg. Daily Credit Sales Period ACP = $430 $1,450/365 = 108.24 days
Days in a year
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Inventory Turnover Ratio =

Sales Inventory

Is inventory efficiently translating into sales for the firm?

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Balance Sheet Excalibur Corporation Liabilities Cash $175 Accounts Payable $115 Accounts Receivable 430 S-T Notes Payable 115 Inventories 625 Current Liabilities $230 Current Assets $1,230 Long-term Debt $600 Plant & Equipment $2,500 Owners Equity Less:Acc. Depr. (1,200) Common Stock $300 Net Fixed Assets $1,300 Capital in Excess of Par 600 Total Assets $2,530 Retained Earnings 800 Total Owners Equity $1,700 Income Statement Total Liabilities and Excalibur Corporation Owners Equity $2,530 Sales $1,450 Assets Cost of Goods Sold 875 Gross Profit $575 Operating Expenses 45 Depreciation 200 Operating Income $330 Interest Expense 60 Income Before Taxes $270 Taxes (40%) 108 Net Income $162 Common Dividends Paid 100 Addition to Retained Earnings $62

Ratio Analysis
Asset Activity Ratios
Sales Fixed Asset Turnover Ratio = Net Fixed Assets How effective is the firm in using its fixed assets to help generate sales?

Inventory Turnover = Ratio Inventory Turnover =

Sales Inventory $1450 $625 = 2.3x

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Balance Sheet Excalibur Corporation Liabilities Cash $175 Accounts Payable $115 Accounts Receivable 430 S-T Notes Payable 115 Inventories 625 Current Liabilities $230 Current Assets $1,230 Long-term Debt $600 Plant & Equipment $2,500 Owners Equity Less:Acc. Depr. (1,200) Common Stock $300 Net Fixed Assets $1,300 Capital in Excess of Par 600 Total Assets $2,530 Retained Earnings 800 Total Owners Equity $1,700 Income Statement Total Liabilities and Excalibur Corporation Owners Equity $2,530 Sales $1,450 Assets Cost of Goods Sold 875 Gross Profit $575 Operating Expenses 45 Depreciation 200 Operating Income $330 Interest Expense 60 Income Before Taxes $270 Taxes (40%) 108 Net Income $162 Common Dividends Paid 100 Addition to Retained Earnings $62

Ratio Analysis
Asset Activity Ratios
Sales Total Assets

Total Asset Turnover Ratio =

Fixed Asset Turnover Ratio

Sales Net Fixed Assets $1,450 = 1.12x $1,300

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How effective is the firm in using its overall assets to generate sales?

Fixed Asset Turnover =

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Assets

Balance Sheet Excalibur Corporation Liabilities Accounts Payable $115 S-T Notes Payable 115 Current Liabilities $230 Long-term Debt $600 Owners Equity Common Stock $300 Capital in Excess of Par 600 Retained Earnings 800 Total Owners Equity $1,700 Total Liabilities and Owners Equity $2,530

Cash $175 Accounts Receivable 430 Inventories 625 Current Assets $1,230 Plant & Equipment $2,500 Less:Acc. Depr. (1,200) Net Fixed Assets $1,300 Total Assets $2,530 Income Statement Excalibur Corporation Sales $1,450 Cost of Goods Sold 875 Gross Profit $575 Operating Expenses 45 Depreciation 200 Operating Income $330 Interest Expense 60 Income Before Taxes $270 Taxes (40%) 108 Net Income $162 Common Dividends Paid 100 Addition to Retained Earnings $62

Ratio Analysis
Market Value Ratios
Price to Earnings Ratio = Market Price per Share Earnings per Share How much are investors willing to pay per dollar of earnings of the firm?

Total Asset Turnover = Ratio Total Asset Turnover =

Sales Total Assets $1,450 $2,530 = 0.57x

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(Indicator of investors attitudes toward future prospects of the firm and of the firms risk.)

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Additional Info: 100 shares $20.00 per share

Balance Sheet Excalibur Corporation Liabilities Cash $175 Accounts Payable $115 Accounts Receivable 430 S-T Notes Payable 115 Inventories 625 Current Liabilities $230 Current Assets $1,230 Long-term Debt $600 Plant & Equipment $2,500 Owners Equity Less:Acc. Depr. (1,200) Common Stock $300 Net Fixed Assets $1,300 Capital in Excess of Par 600 Total Assets $2,530 Retained Earnings 800 Total Owners Equity $1,700 Income Statement Total Liabilities and Excalibur Corporation Owners Equity $2,530 Sales $1,450 Assets Cost of Goods Sold 875 Gross Profit $575 Operating Expenses 45 Depreciation 200 Operating Income $330 Interest Expense 60 Income Before Taxes $270 Taxes (40%) 108 Net Income $162 Common Dividends Paid 100 Addition to Retained Earnings $62

Ratio Analysis
Market Value Ratios
Market to Book Ratio = Market Price per Share Book Value per Share

P/E = Market Price/Share Ratio EPS

How much are investors willing to pay per dollar of book value?

P/E ratio =

$20.00 = 12.35x $162/100

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Additional Info: 100 shares $20.00 per share

Assets

Balance Sheet Excalibur Corporation Liabilities Accounts Payable $115 S-T Notes Payable 115 Current Liabilities $230 Long-term Debt $600 Owners Equity Common Stock $300 Capital in Excess of Par 600 Retained Earnings 800 Total Owners Equity $1,700 Total Liabilities and Owners Equity $2,530

Cash $175 Accounts Receivable 430 Inventories 625 Current Assets $1,230 Plant & Equipment $2,500 Less:Acc. Depr. (1,200) Net Fixed Assets $1,300 Total Assets $2,530

Ratio

Industry Excalibur
38% 20% 12% 9.0% 13.4% 39.7% 22.8% 11.2% 6.4% 9.5%

Income Statement Excalibur Corporation Sales $1,450 Cost of Goods Sold 875 Gross Profit $575 Operating Expenses 45 Depreciation 200 Operating Income $330 Interest Expense 60 Income Before Taxes $270 Taxes (40%) 108 Net Income $162 Common Dividends Paid 100 Addition to Retained Earnings $62

Profitability Gross Profit Margin Operating Profit Margin Net Profit Margin Return on Assets Return on Equity

Market to = Book

Price/Share Common Equity/ # shares

Excalibur is good at keeping operating costs down, but not as good at total costs. ROA and ROE are low mainly due to productivity problems.

M/B =

$20.00 $1,700/100

= 1.18x
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Summary of Excalibur Corporation Ratios

Ratio
Liquidity Current Ratio Acid-Test Ratio

Industry
5.00x 3.00x

Excalibur
5.35x 2.63x

Ratio

Industry Excalibur
35% 7.00x 49% 33% 5.50x 48%

Debt Debt Ratio Times Interest Earned Debt to Equity

Looking at the current ratio it appears that Excalibur is more liquid than the industry.... however when looking at Acid Test (a better measure) they are not as liquid indicating that inventory levels are probably too high.
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While the debt ratio is close to the industry average, Excalibur is not able to cover interest payments as easily as the industry. This indicates Excalibur may have too much debt relative to what they can realistically afford.
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Ratio

Industry Excalibur
90 days 3.00x 1.00x 0.75x 108 days 2.32x 1.12x .57x

Ratio
Market Value Price Earnings Market to Book

Industry Excalibur
18.0 2.5 12.35 1.18

Asset Activity Avg. Collection Period Inventory Turnover Fixed Asset Turnover Total Asset Turnover

Collection policies need examining, as Excalibur is slower than average at collecting receivables. Inventories are being sold more slowly than the industry average, again indicating inventories that are too high. Excalibur is very efficient at converting Fixed Assets to Sales (fixed assets are productive). However, overall assets are not productive indicating Current Assets (e.g. inventories) are not as productive as for the industry.
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Excaliburs Investors are not willing to pay as much per dollar of earnings or per dollar of book value as they are for shares in other firms in the industry. This signals that they consider the firms prospects to be worse than the average. However, the firm is still selling for more than its accounting book value.
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Economic Value Added (EVA)



Market Value Added (MVA)



EVA is the amount of profit earned after all costs have been subtracted, including the cost of the funds used for the investmen t. It is often seen as the measure of true economic profit.

MVA is the market value of the firm, debt plus equity, minus the total amount of capital invested in the firm. A firm that consistently invests in high EVA projects would have a high MVA.

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Relationships Among Ratios: The Du Pont System



Relationships Among Ratios: The Du Pont System

The Du Pont Equation
Return = on Assets Net Profit x Margin Total Asset Turnover

Ratio Analysis generally involves an examination of related ratios. Comparison of these relationships over time helps to identify the company s strengths and weaknesses.

Net Inc. Assets

= Net Inc. x
Sales

Sales Assets

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Relationships Among Ratios: The Du Pont System

The Modified Du Pont Equation
Return = on Equity Net Profit x Margin Total x Asset Turnover Equity Multiplier

Financial Statement Analysis



Net Inc. = Equity

Net Inc. Sales

Sales Assets

Equity

Assets

Now that you ll be able to recognize these new items we ve just discussed, you re ready to do some analysis of the financial statements. First, we ll talk about horizontal and vertical analysis. analysis. Then, we ll discuss financial ratios -standard measures that enable analysts to compare companies of different sizes
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Horizontal Analysis
Horizontal analysis compares one value across several periods. First, a base year must be chosen as the basis for comparison.

Horizontal Analysis
This shows 2000 as the base year. The base years sales are subtracted from each years sales. Then, this difference is expressed as a percentage of the base years sales.

Sales

2003 $41,500

2002 $37,850

2001 2000 $36,300 $35,000

2006

2005

2004

2003
Base year

Sales

$41,500 18.6%

$37,850 8.1%

$36,300 $35,000 3.7%

The difference between each year and the base year is expressed as a percentage of the base year.
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Horizontal Analysis
For example, the sales for 2006 represent an increase of 18.6% over the base year 2003.

Vertical Analysis
compares each item in a financial statement to a base number set to 100%. Every item on the financial statement is then reported as a percentage of that base.

Sales

2006 $41,500 18.6%

2005 $37,850 8.1%

2004 2003 $36,300 $35,000 3.7%

Base year

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Vertical Analysis
Sales Cost of goods sold Gross margin Total operating expenses Operating income Other income Income before taxes Income taxes Net income 2006 $38,303 19,688 $18,615 13,209 $ 5,406 2,187 $ 7,593 2,827 $ 4,766 % 100.0 51.4 48.6 34.5 14.1 5.7 19.8 7.4 12.4
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CommonCommon-size Analysis
An analysis of percentage financial statements where all balance sheet items are divided by total assets and all income statement items are divided by net sales or revenues. revenues.

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Basket Wonders Common Size Balance Sheets

Regular (thousands of $) Assets Cash AR Inv Other CA Tot CA Net FA LT Inv Other LT Tot Assets 19X1 148 283 322 10 763 349 0 111 1,223 19X2 100 410 616 14 1,140 631 50 223 2,044 19X3 90 394 696 15 1,195 701 50 223 2,169 Common-Size (%) 19X1 12.10 23.14 26.33 0.82 62.39 28.54 0.00 9.08 100.0 19X2 4.89 20.06 30.14 0.68 55.77 30.87 2.45 10.91 100.0 19X3 4.15 18.17 32.09 0.69 55.09 32.32 2.31 10.28 100.0
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Basket Wonders Common Size Balance Sheets

Regular (thousands of $) Liab+Equity Note Pay Acct Pay Accr Tax Other Accr Tot CL LT Debt Equity Tot L+E 19X1 290 81 13 15 399 150 674 1,223 19X2 295 94 16 100 505 453 1,086 2,044 19X3 290 94 16 100 500 530 1,139 2,169 Common-Size (%) 19X1 23.71 6.62 1.06 1.23 32.62 12.26 55.11 100.0 19X2 14.43 4.60 0.78 4.89 24.71 22.16 53.13 100.0 19X3 13.37 4.33 0.74 4.61 23.05 24.44 52.51 100.0
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Basket Wonders Common Size Income Statements

Regular (thousands of $) 19X1 Net Sales COGS Gross Profit Adm. EBIT Int Exp EBT EAT Cash Div 1,235 849 386 180 206 20 186 112 50 19X2 2,106 1,501 605 383 222 51 171 103 50 19X3 2,211 1,599 612 402 210 59 151 91 50 Common-Size (%) 19X1 100.0 68.7 31.3 14.6 16.7 1.6 15.1 9.1 4.0 19X2 100.0 71.3 28.7 18.2 10.5 2.4 8.1 4.9 2.4 19X3 100.0 72.3 27.7 18.2 9.5 2.7 6.8 4.1 2.3
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Index Analyses
An analysis of percentage financial statements where all balance sheet or income statement figures for a base year equal 100.0 (percent) and subsequent financial statement items are expressed as percentages of their values in the base year.
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Basket Wonders Balance Sheets

Regular (thousands of $) Assets Cash AR Inv Other CA Tot CA Net FA LT Inv Other LT Tot Assets 19X1 148 283 322 10 763 349 0 111 1,223 19X2 100 410 616 14 1,140 631 50 223 2,044 19X3 90 394 696 15 1,195 701 50 223 2,169 19X1 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Indexed
Indexed (%) 19X2 67.6 144.9 191.3 140.0 149.4 180.8 inf. 200.9 167.1 19X3 60.8 139.2 216.1 150.0 156.6 200.9 inf. 200.9 177.4
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Basket Wonders Balance Sheets

Regular (thousands of $) Liab+Equity Note Pay Acct Pay Accr Tax Other Accr Tot CL LT Debt Equity Tot L+E 19X1 290 81 13 15 399 150 674 1,223 19X2 295 94 16 100 505 453 1,086 2,044 19X3 290 94 16 100 500 530 1,139 2,169 19X1 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Indexed
Indexed (%) 19X2 101.7 116.0 123.1 666.7 126.6 302.0 161.1 167.1 19X3 100.0 116.0 123.1 666.7 125.3 353.3 169.0 177.4
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Basket Wonders Indexed Income Statements

Regular (thousands of $) 19X1 Net Sales COGS Gross Profit Adm. EBIT Int Exp EBT EAT Cash Div 1,235 849 386 180 206 20 186 112 50 19X2 2,106 1,501 605 383 222 51 171 103 50 19X3 2,211 1,599 612 402 210 59 151 91 50 19X1 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Indexed (%) 19X2 170.5 176.8 156.7 212.8 107.8 255.0 91.9 92.0 100.0 19X3 179.0 188.3 158.5 223.3 101.9 295.0 81.2 81.3 100.0
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