ACC1AIS – Homework Exercises – Week 10

Excel Exercise 1 – Prepare vertical analysis

This exercise is required to be done in MS Excel environment. No manual/paper calculation is
accepted.
Operating data for Beach Ltd is presented here:

2019 2020
Sales $870,000 $900,000
Cost of sales $460,000 $520,000
Selling expenses $93,000 $140,000
Administrative expenses $61,000 $65,000
Income tax expense $76,800 $52,500
Profit $179,200 $122,500

Required

1. Transfer the above data to an MS Excel worksheet.

2. Within the MS Excel worksheet prepare a schedule to indicate a vertical analysis for 2019 and
2020. The base amount for performing vertical analysis is the sales amount.

3. In your worksheet draw graphs for 2019 and 2020 to show how expenses are distributed in 2019
and 2020.

Excel Exercise 2 – Prepare Vertical & Horizontal analysis, Calculate Ratios

This exercise is required to be done in MS Excel environment. No manual/paper calculation is
accepted.
Presented below are Income statement, and Balance Sheet of Snick’s Board Shop for December
2018 and December 2019.
Snick's Board Shop
Income Statemnt
for the period ended

31/12/2018 % Sales 31/12/2019 % Sales % Change

Sales $ 28,000 $ 35,000
Less: Cost of Goods Sold 13,000 16,000
Gross Margin 15,000 19,000
Expenses:
Advertising $ 2,200 $ 2,500
Depreciation 1,000 1,000
Wages 5,000 6,000
Supplies 300 450
Utilities 800 9,300 1,600 11,550
Net income $ 5,700 $ 7,450

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 Snick's Board Shop
Balance Sheet
as of
December-2018 % Assets December-2019 % Assets % Change
Assets
Current Assets:
Cash $ 3,500 $ 4,600
Inventory 5,750 6,500
Supplies 250 9,500 500 11,600

Equipment 8,000 10,900

Less: Accumulated Depreciation 1,500 6,500 2,500 8,400
Total $ 16,000 $ 20,000

Liabilities and Stockholders' Equity

Current Liabilities
Accounts Payable $ 11,000 $ 7,500
Payroll Liabilities 2,000 13,000 2,050 9,550

Owner's Equity 3,000 10,450

Total $ 16,000 $ 20,000

1. Transfer the above Income Statement, and Balance Sheet to an Excel worksheet.

2. In an Excel worksheet, create a vertical and horizontal analysis of the Income Statement. You are
required to use appropriate Excel functions to provide the vertical and horizontal analysis. (Note: for
the purpose of performing horizontal analysis the base year is 2018, for the purpose of performing
vertical analysis of the income statement the base amount is the sales amount).

3. In an Excel worksheet, create a vertical and horizontal analysis of the Balance Sheet. You are
required to use appropriate Excel functions to provide the vertical and horizontal analysis. (Note: for
the purpose of performing horizontal analysis the base year is 2018, for the purpose of performing
vertical analysis of the balance sheet the base amount is total assets).

4. In an Excel worksheet, draw graphs to visually indicate how expenses, assets and liabilities are
distributed in 2018 and 2019.

5. In an Excel worksheet calculate the following ratios for 2019:

5.1 Profitability ratios:

- Return on assets
- Return on equity
- Profit margin
- Gross margin

5.2 Liquidity ratios:

- Current ratio
- Quick ratio
- Inventory turnover
- Days in inventory ratio

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5.3 Solvency ratios:

- Debt to total assets ratio

6. In an Excel worksheet draw graphs to compare the relevant ratios to each other visually. Graphs
should be effective, and easy to read and understand for decision making purposes.

7. provide a brief explanation about the profitability of Snick’s board shop in 2018 and 2019.

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