HORIZONTAL & VERTICAL ANALYSIS OF BALANCE & INCOME STATEMENTS Team 8: J&J Electrical

Income Statement Horizontal Analysis 2005Change2004Change2003Change2002Change2001 Net Sales5,222,7583%5,089,07859%3,210,758-7%3,448,65415%2,988,485 Cost Of Sales4,118,7681%4,065,71483%2,226,5516%2,097,8136%1,969,973 Gross Profit1,103,9908%1,023,3644%984,207-27%1,350,84133%1,018,512 Operating Expenses932,65625%748,233-5%785,6703%764,6749%699,813 Income From Operations171,334-38%275,13139%198,537-66%586,16784%318,699 Interest income182-80%933-81%5,031239%1,4830 Pension Contribution50,000-50%100, %135,39915%117,366 Contract Settlement %25,000 Loss on Sale of Assets00000 Other Income (Expenses)16, Net Income before income taxes (NIBT)137,917-22%176,064-14%203,568-55%452,251100%226,333 Provision for State Income Tax987-76%4,169-3%4,292-4%4,4536%4,219 Net income after taxes (NIAT)136,930-20%171,895-14%199,276-55%447,798102%222,114 Accumulated Adjustments, Beginning of Year692,0409%636,146-13%734,37071%430,57274%248,058 Distributions50,328-42%86,051-71%297,500107%144,000264%39,600 Accumulated Adjustments, End of Year778,6428%721,99013%636,146-13%734,37071%430,572 Income per Share (1,000 Shares Outstanding)137-20%172-14%199-56%4484%431

Income Statement Horizontal Analysis (Cont’d) J&J Electrical had growth in their revenue over the five year span, but its net income after taxes saw a decline almost every year as well. There was a substantial increases in costs from 2003 – 2004 which was a major reason for their decrease in net income. They also had a big increase in Operating Expenses

Income Statement Vertical Analysis 2005Percent Percent Percent Percent Percent 2001 Net Sales5,222,758100%5,089,078100%3,210,758100%3,448,654100%2,988,485100% Cost Of Sales4,118, %4,065, %2,226, %2,097, %1,969, % Gross Profit1,103, %1,023, %984, %1,350, %1,018, % Operating Expenses932, %748, %785, %764, %699, % Income From Operations171,3343.3%275,1315.4%198,5376.2%586, %318, % Interest income1820.0%9330.0%5,0310.2%1,4830.0%0 Pension Contribution50,0001.0%100,0002.0%00.0%135,3993.9%117,3663.9% Contract Settlement00.0% ,0000.8% Loss on Sale of Assets00.0% Other Income (Expenses)16,4010.3%00.0%0 0 Net Income before income taxes (NIBT) %176,0943.5%203,5686.3%452, %226,3337.6% Provision for State Income Tax9870.0%4,1690.1%4,2920.1%4,4530.1%4,2190.1% Net income after taxes (NIAT)137,9172.6%176,0643.5%203,5686.3%452, %226,3337.6% Accumulated Adjustments, Beginning of Year692, %636, %734, %430, %248,0588.3% Distributions50,3281.0%86,0511.7%297,5009.3%144,0004.2%39,6001.3% Accumulated Adjustments, End of Year778, %721, %636, %734, %430, % Income per Share (1,000 Shares Outstanding)1370.0%1720.0%1990.0%4480.0%4310.0%

Income Statement Vertical Analysis (Cont’d) When analyzing the companies financial success vertically, it’s evident that costs have taken up a high percent of sales. In 2004, 80% of the companies net sales where costs. This obviously isn’t a good look for the company and that’s somewhere they would need to improve on if they want to see profit success again.

Balance Sheet Horizontal Analysis 2005% Change2004% Change2003% Change2002% Change2001 Current assets Cash and cash equivalents$95,891-55%$212,170976%-$24, %$428, %-$35, Accounts receivable954,71229%738,842-16%639,51931%489,516-17%588,530 uncompleted contracts59,227-68%184,473-4%176,606199%59,142 0 Inventories7,36047%5,0000%5,0000%5,0000%5,000 Prepaid expenses and other1,149106%55997%16,700405%3,304-58%7,880 Bonds -100%100 Total current assets1,118,339-2%1,141,044-40%813,600-17%985,66374%565,719 Fixed assets Autos and Trucks239,57212%214,147-17%182,42317%156,0325%148,077 Shop Equipment24,7940%24,794-81%13,6610%13,6610%13,661 Office Equipment47,3949%43,378-2%42,53212%38,1300%38,130 Leasehold Improvements13,6040%13,6040%13,6040%13,6040%13,604 Accumulated Depreciation-207,277-17%-250,090-15%-217,38821%-180,14616%-154,676 Deferred Tax Assets00%0100%224-87%1,6670%1,667 Total fixed assets118,087158%45,833-32%34,832-19%42,948-29%60,463 Total Assets1,236,4264%1,186,877-40%848,432-18%1,028,61164%626,182

Balance Sheet Horizontal Analysis (Cont’d) LIABILITIES AND STOCKHOLDERS’ EQUITY2005% Change2004% Change2003% Change2002% Change2001 Liabilities Accounts Payable$265, %$131,297-42%92,291111%$43,80142%$30,823 Accrued Payroll18,21322%14, %2,709-88%22,3356%21,006 Short Term Debt4,385-72%15, %7,472-85%50,614 0 Billings in Excess of Costs and Estimated Earnings82,661-57%192, %38,18439%27,419-77%117,366 Pension Contribution Due50,000-50%100, %135,399 0 Long-Term Debt8, %5,924 Other Liabilities8, %61, %4,173-96%99,991 Total Liabilities437,784-4%454, %201,786-29%283,74153%185,110 Stockholders’ Equity Capital Stock (15,000 authorized, 2,000 issued and20,0000%20,0000%20,0000%20,0000%20,000 1,000 outstanding) Treasury Stock 0 (9,500) (9,500) (9,500) (9,500)0-100%-9,5000%-9,5000%-9,5000%-9,500 Accumulated Adjustments (Retained Earnings)778,6428%721,990-13%636,146-13%734,37071%430,572 Total Stockholders’ Equity798,6429%732,490-13%646,646-13%744,87069%441,072 Total Liabilities and Stockholders’ Equity1,236,4264%1,186,877-40%848,432-18%1,028,61164%626,182

Balance Sheet Horizontal Analysis (Cont’d) Write up needed..

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