HORIZONTAL & VERTICAL ANALYSIS OF BALANCE & INCOME STATEMENTS

Team 8: J&J Electrical

Income Statement Horizontal Analysis

2005 Change 2004 Change 2003 Change 2002 Change 2001Net Sales 5,222,758 3% 5,089,078 59% 3,210,758 -7% 3,448,654 15% 2,988,485Cost Of Sales 4,118,768 1% 4,065,714 83% 2,226,551 6% 2,097,813 6% 1,969,973

Gross Profit 1,103,990 8% 1,023,364 4% 984,207 -27% 1,350,841 33% 1,018,512Operating Expenses 932,656 25% 748,233 -5% 785,670 3% 764,674 9% 699,813

Income From Operations 171,334 -38% 275,131 39% 198,537 -66% 586,167 84% 318,699Interest income 182 -80% 933 -81% 5,031 239% 1,483 0Pension Contribution 50,000 -50% 100,000 0 -100% 135,399 15% 117,366Contract Settlement 0 0 0 0 -100% 25,000Loss on Sale of Assets 0 0 0 0 0Other Income (Expenses) 16,401 0 0 0

Net Income before income taxes (NIBT) 137,917 -22% 176,064 -14% 203,568 -55% 452,251 100% 226,333Provision for State Income Tax 987 -76% 4,169 -3% 4,292 -4% 4,453 6% 4,219

Net income after taxes (NIAT) 136,930 -20% 171,895 -14% 199,276 -55% 447,798 102% 222,114Accumulated Adjustments, Beginning of Year 692,040 9% 636,146 -13% 734,370 71% 430,572 74% 248,058Distributions 50,328 -42% 86,051 -71% 297,500 107% 144,000 264% 39,600Accumulated Adjustments, End of Year 778,642 8% 721,990 13% 636,146 -13% 734,370 71% 430,572Income per Share (1,000 Shares Outstanding) 137 -20% 172 -14% 199 -56% 448 4% 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

2005 Percent 2005 2004 Percent 2004 2003 Percent 2003 2002 Percent 2002 2001 Percent 2001Net Sales 5,222,758 100% 5,089,078 100% 3,210,758 100% 3,448,654 100% 2,988,485 100%Cost Of Sales 4,118,768 78.9% 4,065,714 79.9% 2,226,551 69.3% 2,097,813 60.8% 1,969,973 65.9%

Gross Profit 1,103,990 21.1% 1,023,364 20.1% 984,207 30.7% 1,350,841 39.2% 1,018,512 34.1%Operating Expenses 932,656 17.9% 748,233 14.7% 785,670 24.5% 764,674 22.2% 699,813 23.4%

Income From Operations 171,334 3.3% 275,131 5.4% 198,537 6.2% 586,167 17.0% 318,699 10.7%Interest income 182 0.0% 933 0.0% 5,031 0.2% 1,483 0.0% 0 0.0%Pension Contribution 50,000 1.0% 100,000 2.0% 0 0.0% 135,399 3.9% 117,366 3.9%Contract Settlement 0 0.0% 0 0.0% 0 0.0% 0 0.0% 25,000 0.8%Loss on Sale of Assets 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0%Other Income (Expenses) 16,401 0.3% 0 0.0% 0 0.0% 0 0.0% 0.0%

Net Income before income taxes (NIBT) 137.917 0.0% 176,094 3.5% 203,568 6.3% 452,251 13.1% 226,333 7.6%Provision for State Income Tax 987 0.0% 4,169 0.1% 4,292 0.1% 4,453 0.1% 4,219 0.1%

Net income after taxes (NIAT) 137,917 2.6% 176,064 3.5% 203,568 6.3% 452,251 13.1% 226,333 7.6%Accumulated Adjustments, Beginning of Year 692,040 13.3% 636,146 12.5% 734,370 22.9% 430,572 12.5% 248,058 8.3%Distributions 50,328 1.0% 86,051 1.7% 297,500 9.3% 144,000 4.2% 39,600 1.3%Accumulated Adjustments, End of Year 778,642 14.9% 721,990 14.2% 636,146 19.8% 734,370 21.3% 430,572 14.4%Income per Share (1,000 Shares Outstanding) 137 0.0% 172 0.0% 199 0.0% 448 0.0% 431 0.0%

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 % Change 2004 % Change 2003 % Change 2002 % Change 2001

Current assets Cash and cash equivalents $95,891 -55% $212,170 976% -$24,225.00 -106% $428,701.00 -1298% -$35,791.00Accounts receivable 954,712 29% 738,842 -16% 639,519 31% 489,516 -17% 588,530uncompleted contracts 59,227 -68% 184,473 -4% 176,606 199% 59,142 0Inventories 7,360 47% 5,000 0% 5,000 0% 5,000 0% 5,000Prepaid expenses and other 1,149 106% 559 97% 16,700 405% 3,304 -58% 7,880Bonds -100% 100 Total current assets 1,118,339 -2% 1,141,044 -40% 813,600 -17% 985,663 74% 565,719

Fixed assets Autos and Trucks 239,572 12% 214,147 -17% 182,423 17% 156,032 5% 148,077Shop Equipment 24,794 0% 24,794 -81% 13,661 0% 13,661 0% 13,661Office Equipment 47,394 9% 43,378 -2% 42,532 12% 38,130 0% 38,130Leasehold Improvements 13,604 0% 13,604 0% 13,604 0% 13,604 0% 13,604Accumulated Depreciation -207,277 -17% -250,090 -15% -217,388 21% -180,146 16% -154,676Deferred Tax Assets 0 0% 0 100% 224 -87% 1,667 0% 1,667 Total fixed assets 118,087 158% 45,833 -32% 34,832 -19% 42,948 -29% 60,463 Total Assets 1,236,426 4% 1,186,877 -40% 848,432 -18% 1,028,611 64% 626,182

Balance Sheet Horizontal Analysis (Cont’d)

LIABILITIES AND STOCKHOLDERS’ EQUITY 2005 % Change 2004 % Change 2003 % Change 2002 % Change 2001Liabilities Accounts Payable $265,024 -102% $131,297 -42% 92,291 111% $43,801 42% $30,823 Accrued Payroll 18,213 22% 14,972 -453% 2,709 -88% 22,335 6% 21,006Short Term Debt 4,385 -72% 15,844 -112% 7,472 -85% 50,614 0Billings in Excess of Costs and Estimated Earnings 82,661 -57% 192,274 -404% 38,184 39% 27,419 -77% 117,366Pension Contribution Due 50,000 -50% 100,000 0 -100% 135,399 0Long-Term Debt 8,875 0 0 0 -100% 5,924Other Liabilities 8,606 0 100% 61,130 1365% 4,173 -96% 99,991 Total Liabilities 437,784 -4% 454,387 -125% 201,786 -29% 283,741 53% 185,110

Stockholders’ Equity Capital Stock (15,000 authorized, 2,000 issued and 20,000 0% 20,000 0% 20,000 0% 20,000 0% 20,0001,000 outstanding) Treasury Stock 0 (9,500) (9,500) (9,500) (9,500) 0 -100% -9,500 0% -9,500 0% -9,500 0% -9,500Accumulated Adjustments (Retained Earnings) 778,642 8% 721,990 -13% 636,146 -13% 734,370 71% 430,572 Total Stockholders’ Equity 798,642 9% 732,490 -13% 646,646 -13% 744,870 69% 441,072 Total Liabilities and Stockholders’ Equity 1,236,426 4% 1,186,877 -40% 848,432 -18% 1,028,611 64% 626,182

Balance Sheet Horizontal Analysis (Cont’d)

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Ratios & Indicator Analysis

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