PREPARING COMMON SIZE STATEMENTS
The financial statements for Matt's Hats, Inc., appear below and on the next page.
|
Matt's Hats, Inc. Income Statement
|
|
|
Year Ended December, 31,
|
|
(In thousands, except per share data)
|
2009
|
2008
|
2007
|
|
Revenues
|
$4,102,721
|
$3,652,412
|
$3,178,569
|
|
Costs and expenses:
|
|
|
|
|
Cost of goods sold
|
$2,256,236
|
$2,234,985
|
$1,952,123
|
|
Selling and administrative
|
927,412
|
653,986
|
598,236
|
|
Interest
|
23,974
|
32,596
|
31,853
|
|
Other expenses (income)
|
1,925
|
2,254
|
(102)
|
|
Total costs and expenses
|
$3,209,547
|
$2,923,821
|
$2,582,110
|
|
Income before income taxes
|
$ 893,174
|
$ 728,591
|
$ 596,459
|
|
Income taxes
|
247,692
|
183,456
|
163,524
|
|
Net income
|
$ 645,482
|
$ 545,135
|
$ 432,935
|
|
Matt's Hats, Inc. Balance Sheets (In thousands)
|
|
ASSETS
|
December, 31
|
|
|
2009
|
2008
|
|
Current assets:
Cash and equivalents
Accounts receivable, less allowance for doubtful accounts of $20,568 and $18,322
Inventories
Deferred income taxes Prepaid expenses
Total current assets Property, plant, and equipment Less accumulated depreciation
Net property, plant, and equipment Goodwill
Other assets Total assets
|
$ 301,695
|
$ 269,648
|
|
670,469
|
604,236
|
|
601,396
|
469,582
|
|
23,415
|
24,397
|
|
43,624
|
36,478
|
|
$1,640,599
|
$1,404,341
|
|
$ 583,152
|
$ 501,239
|
|
206,452
|
148,231
|
|
$ 376,700
|
$ 353,008
|
|
162,325
|
127,695
|
|
29,158
|
23,598
|
|
$2,208,782
|
$1,908,642
|
| liabilities and stockholders' equity |
| Current liabilitis |
|
|
|
Current portion of long-term debt
|
$ 63,169
|
$ 5,665
|
|
Notes payable
|
112,596
|
110,423
|
|
Accounts payable
|
128,696
|
139,364
|
|
Accrued liabilities
|
143,874
|
133,569
|
|
Income taxes payable
|
23,541
|
38,972
|
|
Total current liabilities
|
$ 471,876
|
$ 427,993
|
|
Long-term debt
|
16,254
|
83,456
|
|
Noncurrent deferred income taxes
|
33,489
|
31,238
|
|
Other noncurrent liabilities
|
46,685
|
27,434
|
|
Commitments and contingencies
|
-
|
-
|
|
Redeemable preferred stock
|
200
|
200
|
|
Total liabilities
|
$ 568,504
|
$ 570,321
|
|
Shareholders' equity:
Common stock at stated value: Class A convertible-27,723 and
|
|
|
|
25,832 shares outstanding
Class B-49,756 and 47,652 shares outstanding
|
$ 164
3,152
|
$ 175
3,120
|
|
Capital in excess of stated value
|
110,596
|
96,546
|
|
Treasury stock (common at cost)
|
(8,741)
|
(7,859)
|
|
Retained earnings
|
1,535,107
|
1,246,339
|
|
Total stockholders' equity
|
$1,640,278
|
$1,338,321
|
|
Total liabilities and stockholders' equity
|
$2,208,782
|
$1,908,642
|
Required:
1. Prepare common income statements to be used for horizontal analysis for Matt's Hats for 2007 to 2009.
2. Indicate why Matt's net income increased between 2007 and 2009.
3. Prepare common size balance sheets to be used for vertical analysis for 2009 and 2008.
4. Determine whether the proportion of dollars invested in the various categories of assets has changed significantly between 2008 and 2009.
5. Determine whether the proportion of capital raised from the various liability categories and common shareholders' equity has changed significantly between 2008 and 2009.
6. Indicate how you would describe Matt's performance and financial position?