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Wonder Corp. has hired you to give them some insight into their business. They have provided the following information for the year ended December 31, 2022:

Wonder Corp

Comparative Balance Sheet

December 31, 2022 and 2021

Assets 2022 2021 Increase(Decrease)

Cash $21,000 $33,000 (12,000)

Accounts receivable 28,000 14,000 14,000

Merchandise inventory 38,000 25,000 13,000

Property, plant, and equipment $70,000 $78,000 (8,000)

Less: Accumulated depreciation (27,000) (24,000) (3,000)

Total $130,000 $126,000 4,000

Liabilities and Stockholders Equity

Accounts Payable $31,000 $43,000 (12,000)

Income Taxes Payable 26,000 20,000 6,000

Bonds Payable 20,000 10,000 10,000

Common Stock 25,000 25,000 0

Retained Earnings 28,000 28,000 0

Total $130,000 $126,000 4,000

Wonder Corp

Income Statement

For the Year Ended December 31, 2022

Sales $286,000

Cost of Goods Sold 194,000

Gross Profit 92,000

Selling Expenses $28,000

Administrative Expenses 9,000 37,000

Income from operations 55,000

Interest Expense 7,000

Income before income taxes 48,000

Income tax expense 7,000

Net Income $41,000

Additional Data:

1. Dividends of $36,000 were declared and paid.

2. During the year equipment was sold for $10,000 cash. This equipment cost $15,000 originally and had a book value of $10,000 at the time of sale.

3. Depreciation expense is $3,000.

4. All sales and purchases are on account.

5. Additional equipment was purchased for $7,000 cash.

Prepare, in proper form, the statement of cash flow for this company using the indirect method?

Prepare a vertical analysis of the income statement?

Prepare a horizontal analysis of the following accounts:

Accounts Receivable

Inventory

Total Assets

What do you consider to be the most important KPI for Wonder? Calculate the KPI, and briefly explain its importance.

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