Acc 561 – American Corporation Analysis
American Corporation Analysis
ACC/561
American Corporation Analysis
The basis of financial analysis is to provide a clear prospective on the financial structure of a business organization. Embedded within financial analysis is the process of identifying the financial strengths and weaknesses of the firm by utilizing important tools such as the income statement, statement of stockholders equity, balance sheet, and the statement of cash flows. Such analysis is conducted for The Hershey Company.
Horizontal Analysis
The followings are the horizontal analysis for The Hershey Company (in thousands) for the fiscal year ended in December 31, 2014. There are some negative changes between the two years due to 5.7 percent higher cost of sales, 144 percent higher business realignment expenses, 6.56 percent higher provision for income tax, and also significant changes in the balance sheet numbers due to an acquisition and $250,000,000 portion of long term debt due. However, the increase of 3.86 percent in net sales in the amount of $275,689,000 is high enough to make Hershey have a positive year. The change in net income for the fiscal year ended in December 31, 2014 is a positive $26,442,000 or 3.22 percent increase. Hershey manages to increase net income in the two years that was analyzed, while still selling a company with expected loss and making strategic acquisition for future growth.
Balance Sheet Horizontal Analysis
December 31,
ASSETS
Variance
Current Assets:
Amount
Percentage
Cash and cash equivalents
374,854
1,118,508
-743,654
-66.49%
Short-term investments
97,131
97,131
0.00%
Accounts receivable – trade, net
596,940
477,912
119,028
24.91%
Inventories
801,036
659,541
141,495
21.45%
Deferred income taxes
100,515
52,511
48,004
91.42%
Prepaid expenses and other
276,571
178,862
97,709
54.63%
Total Current Assets
2,247,047
2,487,334
-240,287
-9.66%
Property, plant and equipment
2,151,901
1,805,345
346,556
19.20%
Goodwill
792,955
576,561
216,394
37.53%
Other intangibles
294,841
195,244
99,597
51.01%
Other