Year 1 Year 2 Year 3 Year 4 $ % $ % $ % $ %Net Sales $ 500,000.00100.00% $ 540,000.00100.00% $ 577,800.00100.00% $ 612,468.00100.00%Cost of goods265,000.0053.00% $ 283,500.0052.50% $ 300,456.0052.00% $ 321,545.7052.50%Gross Margin235,000.0047.00% $ 256,500.0047.50% $ 277,344.0048.00% $ 290,922.3047.50%Operating expenses210,000.0042.00% $ 226,800.0042.00% $ 245,565.0042.50% $ 257,236.5642.00%Operating proft25,000.005.00% $ 29,700.005.50% $ 31,779.005.50% $ 33,685.745.50%Supposing that Mr. Ptolemy achieved his Year 3 and Year 4 performance goals as planned, compare the Year 1 through Year 4 yearly results.Hint: Calculate ‘ trends’ from Year 1 to Year 2, from Year 2 to Year 3, and from Year 3 to Year 4 in terms of NS, COGS, GM,OE and profit. Show your calculations and interpret the meaning of the obtained trend figures. Year 1-2Year 2-3Year 3-4Net sales Cost of goods Gross margin Operating expenses Operating profit

To get the trends we will compute the yoy changes (year on year) changes for each line item for each…

Answered: Supposing that Mr. Ptolemy achieved his…

Corporate Financial Accounting

14th Edition

ISBN:9781305653535

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter14: Financial Statement Analysis

Section: Chapter Questions

Problem 14.5EX: Horizontal analysis of the income statement Income statement data for Winthrop Company for two...

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	Year 1		Year 2		Year 3		Year 4
	$	%	$	%	$	%	$	%
Net Sales	$ 500,000.00	100.00%	$ 540,000.00	100.00%	$ 577,800.00	100.00%	$ 612,468.00	100.00%
Cost of goods	265,000.00	53.00%	$ 283,500.00	52.50%	$ 300,456.00	52.00%	$ 321,545.70	52.50%
Gross Margin	235,000.00	47.00%	$ 256,500.00	47.50%	$ 277,344.00	48.00%	$ 290,922.30	47.50%
Operating expenses	210,000.00	42.00%	$ 226,800.00	42.00%	$ 245,565.00	42.50%	$ 257,236.56	42.00%
Operating proft	25,000.00	5.00%	$ 29,700.00	5.50%	$ 31,779.00	5.50%	$ 33,685.74	5.50%

Supposing that Mr. Ptolemy achieved his Year 3 and Year 4 performance goals as planned, compare the Year 1 through Year 4 yearly results.
Hint: Calculate ‘ trends’ from Year 1 to Year 2, from Year 2 to Year 3, and from Year 3 to Year 4 in terms of NS, COGS, GM,OE and profit. Show your calculations and interpret the meaning of the obtained trend figures.

	Year 1-2	Year 2-3	Year 3-4
Net sales
Cost of goods
Gross margin
Operating expenses
Operating profit

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