Financial Accounting-w/cd-package
3rd Edition
ISBN: 9780131060876
Author: REIMERS
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 10, Problem 30EB
To determine
Perform horizontal analysis for sales using 2006 as a base year and interpret the results.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
A condensed income statement for Weber Associates and a partially completed vertical analysis follow.
Required:
1. Complete the vertical analysis by computing each missing line item as a percentage of net revenues. TIP: In the prior year, Cost of
Goods Sold was 31 percent of Net Revenues, computed as ($1,397 ÷ $4,571).
2. Does Cost of Goods Sold, as a percentage of Net Revenues, represent better or worse performance in 2019 as compared to 2018?
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Complete the vertical analysis by computing each missing line item as a percentage of net revenues. TIP: In the prior year,
Cost of Goods Sold was 31 percent of Net Revenues, computed as ($1,397 ÷ $4,571). (Decreases should be indicated by a
minus sign. Round your answers to the nearest whole percent.)
Net Revenues
Cost of Goods Sold
Research and Development Expense
Sales and Marketing Expense
General and Administrative Expense
Income from Operations
Other…
Loomis, Inc. reported the following on the company’s income statement in two recent years:
Please see the image for details:
a. Determine the times interest earned ratio for the current year and the prior year. Round to one decimal place.b. Is this ratio improving or declining?
Selected comparative financial statements of Haroun Company follow.
HAROUN COMPANY
Comparative Income Statements
For Years Ended December 31, 2021-2015
($ thousands)
Sales
2021
Cost of goods sold
$ 1,769
1,271
2020
$ 1,549
2019
2018
2017
2016
2015
$ 1,410
$ 1,292
$ 1,206
$ 1,121
$ 919
1,034
889
778
723
676
539
Gross profit
498
515
521
514
483
445
380
Operating expenses
Net income
377
295
271
200
173
171
142
$ 121
$ 220
$ 250
$ 314
$ 310
$ 274
$ 238
HAROUN COMPANY
Comparative Year-End Balance Sheets
December 31, 2021-2015
($ thousands)
Assets
Cash
Accounts receivable, net
Merchandise inventory
Other current assets
Long-term investments
Plant assets, net
Total assets
Liabilities and Equity
2021
2020
2019
2018
2017
2016
2015
$ 108
773
$ 142
812
$ 148
735
2,797
2,036
1,779
$ 151
564
1,499
$ 157
496
$ 155
$ 160
470
332
1,346
1,144
829
72
65
40
71
60
61
32
e
B
220
220
220
220
3,422
3,409
2,982
1,683
$ 7,172
$ 6,464
$ 5,684
$ 4,188
$ 4,019
1,740
1,546
$ 3,596
$ 2,900
1,327
Current liabilities…
Chapter 10 Solutions
Financial Accounting-w/cd-package
Ch. 10 - Prob. 1YTCh. 10 - Prob. 2YTCh. 10 - Prob. 3YTCh. 10 - Prob. 4YTCh. 10 - Prob. 5YTCh. 10 - Define the items that the Financial Accounting...Ch. 10 - Prob. 2QCh. 10 - Prob. 3QCh. 10 - Prob. 4QCh. 10 - Prob. 5Q
Ch. 10 - Prob. 6QCh. 10 - What is solvency? Which ratios are useful for...Ch. 10 - What is profitability? Which ratios are useful for...Ch. 10 - What are market indicators? Which ratios are...Ch. 10 - Prob. 10QCh. 10 - Prob. 1MCQCh. 10 - Current assets for Kearney Company are 120,000 and...Ch. 10 - Prob. 3MCQCh. 10 - Prob. 4MCQCh. 10 - Prob. 5MCQCh. 10 - Prob. 6MCQCh. 10 - Prob. 7MCQCh. 10 - Prob. 8MCQCh. 10 - Prob. 9MCQCh. 10 - Prob. 10MCQCh. 10 - Prob. 1SEACh. 10 - Prob. 2SEACh. 10 - Prob. 3SEACh. 10 - Prob. 4SEACh. 10 - Prob. 5SEACh. 10 - A five-year comparative analysis of Low Light...Ch. 10 - Prob. 7SEACh. 10 - Prob. 8SEBCh. 10 - Prob. 9SEBCh. 10 - Prob. 10SEBCh. 10 - Perform a vertical analysis on the following...Ch. 10 - Prob. 12SEBCh. 10 - Prob. 13SEBCh. 10 - Use the following information to construct a...Ch. 10 - Prob. 16EACh. 10 - Prob. 17EACh. 10 - Prob. 18EACh. 10 - Prob. 19EACh. 10 - Use the balance sheets from Suzannes Hotels in...Ch. 10 - Prob. 21EACh. 10 - Prob. 22EACh. 10 - Prob. 23EACh. 10 - Use the statements of earnings for Campbell Soup...Ch. 10 - Prob. 25EACh. 10 - Prob. 26EACh. 10 - Prob. 27EACh. 10 - Prob. 28EBCh. 10 - Prob. 29EBCh. 10 - Prob. 30EBCh. 10 - Prob. 31EBCh. 10 - Prob. 32EBCh. 10 - Prob. 33EBCh. 10 - Prob. 34EBCh. 10 - Prob. 35EBCh. 10 - Prob. 36EBCh. 10 - Prob. 37EBCh. 10 - Prob. 38EBCh. 10 - Prob. 39EBCh. 10 - Prob. 40EBCh. 10 - Prob. 41PACh. 10 - Prob. 42PACh. 10 - Prob. 43PACh. 10 - Following are the income statements for Alpha...Ch. 10 - Prob. 45PACh. 10 - Prob. 46PACh. 10 - Prob. 47PACh. 10 - You are interested in investing in Teddy Company,...Ch. 10 - Prob. 49PBCh. 10 - Prob. 50PBCh. 10 - Prob. 51PBCh. 10 - Prob. 52PBCh. 10 - Prob. 53PBCh. 10 - Prob. 54PBCh. 10 - Prob. 55PBCh. 10 - Prob. 56PBCh. 10 - Prob. 1CTPCh. 10 - Prob. 2CTP
Knowledge Booster
Similar questions
- For 2014, Lindell Company reported its most significant decline in net income in years. At the end of the year, H. Finn, the president, is presented with the following condensed comparative income statement: Instructions1. Prepare a comparative income statement with horizontal analysis for the two-year period, using 2013 as the base year. Round to one decimal place.2. To the extent the data permit, comment on the significant relationships revealed by the horizontal analysis prepared in(1).arrow_forwardA condensed income statement for Corolla Corporation and a partially completed vertical analysis are presented below. Required: 1. Complete the vertical analysis by computing each missing line item as a percentage of sales revenues. 2. Does Corolla's Cost of Goods sold for the current year, as a percentage of revenues, represent better or worse performance as compared to that for the previous year? 3. Has Corolla"s net profit margin increased, or decreased, over the two years? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Complete the vertical analysis by computing each missing line item as a percentage of sales revenues. (Round your answers to the nearest whole percent.) COROLLA CORPORATION Income Statement (summarized) (in millions of U.S. dollars) Current Year Previous Year Sales Revenues $ 2,085 100 % $ 2,155 100 % Cost of Goods Sold 1,727 83 % 1,631 % Selling, General, and Administrative Expenses 243 % 310 14 % Other Operating…arrow_forwardAn analyst is evaluating the profi tability of Daimler AG (Xetra: DAI) over a recentfi ve-year period. He gathers the following revenue data and calculates the followingprofi tability ratios from information in Daimler’s annual reports:2009 2008 2007 2006 2005Revenues (€ millions) 78,924 98,469 101,569 99,222 95,209Gross profi t margin 16.92% 21.89% 23.62% 20.60% 19.48%Operating profi t (EBIT) margin a–1.92% 2.77% 8.58% 5.03% 3.02%Pretax margin –2.91% 2.84% 9.04% 4.94% 2.55%Net profi t margin –3.35% 1.73% 4.78% 3.19% 2.37%aEBIT (Earnings before interest and taxes) is the operating profi t metric used by Daimler.Daimler’s revenue declined from 2007 to 2008 and from 2008 to 2009. Further,Daimler’s 2009 revenues were the lowest of the fi ve years. Management’s discussion ofthe decline in revenue and EBIT in the 2009 Annual Report notes the following:Th e main reason for the decline [in EBIT] was a signifi cant drop in revenuedue to markedly lower unit sales in all vehicle segments as a…arrow_forward
- Using Pfizer’s Income Statement, perform a horizontal analysis and answer the following questions: 1. What can you say about the company’s performance throughout the years? 2. What can you say about the sales performance of the company from 2008 to 2009? Research on what could have happened during that period which led to the results of your horizontal analysis?arrow_forwardCreate an appropriate graph to show the correlation between the total revenuegenerated by Tesco and the number of its stores over the last recorded fiveyears?arrow_forwardRequired: Use an Excel file to answer the following questions. Compute the following ratios for the companies’ 2014 fiscal years. (Use formulas): Current ratio Average days to sell inventory. (Use average inventory.) Debt to assets ratio. Return on investment. (Use average assets and use “earnings from continuing operations” rather than “net earnings.”) Gross margin percentage. Asset turnover. (Use average assets.) Net margin. (Use “earnings from continuing operations” rather than “net earnings.”) Plant assets to long-term debt ratio. Which company appears to be more profitable? Explain your answer and identify which ratio(s) from Requirement a you used to reach your conclusion. Which company appears to have the higher level of financial risk? Explain your answer and identify which ratio(s) from Requirement a you used to reach your conclusion. Which company appears to be charging higher prices for its goods? Explain your answer and identify which ratio(s) from Requirement a you…arrow_forward
- A. The following items were taken from the financial statements of Salley, Inc. over a three year period: Using the horizontal analysis and 2016 as the base year, compute the change in percentages for net sales, cost of goods sold, gross profit, operating expenses and net income. Explain whether the trends are favorable or unfavorable for each item. Item 2018 Net Sales 825,000 Cost of Goods Sold 630,000 Gross Profit 195,000 Operating Expenses 100,000 Net Income P 95,000 2017 P 740,000 580,000 160,000 80,000 P 80,000 2016 675,000 535,000 140,000 75,000 P 65,000arrow_forwardSave Mivatin Products Ltd. reported the following on its 2011 comparative income statement: (In millions) 2011 2010 2009 Net sales $148.5 $139.0 $149.5 Cost of sales 129.5 108.0 114.0 Perform a horizontal analysis of net sales, cost of sales, and gross margin, both in dollar amounts and in percentages, for 2011 and 2010. (Round the percentages to one decimal place, X.X%. Use a minus sign or parentheses to indicate a decrease.) Mivatin Products Ltd. Income Statement - (Adapted) For the Year Ended December 31, 2011 and 2010 Increase/(Decrease) (amounts in millions) 2011 2010 2011 2010 2009 Amt. % Amt % Net sales $148.5 $139.0 $149.5 Cost of sales 129.5 108.0 114.0 Gross marginarrow_forward- 1. Prepare a comparative income statement with horizontal analysis for the two-year period, using 20Y1 as the base year. Round percentages to one decimal place. Use the minus sign to indicate a decrease in the "Difference" columns. McDade Company Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 Sales Cost of merchandise sold Gross profit Selling expenses Net income Administrative expenses Total operating expenses Income from operations Other revenue Income before income tax expense $100,382 $170,000 Income tax expense 28,100 51,000 $72,282 $119,000 2. Net income has Difference Amount 7 20Y2 20Y1 $818,551 $703,000 589,600 440,000 $228,951 $263,000 $ $84,080 $59,000 48,320 37,000 $132,400 $96,000 $ $96,551 $167,000 3,831 3,000 from 20Y1 to 20Y2. Sales have Difference Percent - % % % % % % % 1% % % 1% increased decreased however, the cost of merchandise sold has causing the gross profit to Previous Nextarrow_forward
- Use the following information to determine the Prior Year and Current Year trend percents for net sales using the Year as the base year Enter the answers thousands of dollars.arrow_forwardVertical analysis of income statement Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows: A. Prepare an income statement in comparative form, stating eachitem for both years as a percent of sales. (Round to the nearestwhole percentage.)B. Comment on the significant changes disclosed by thecomparative income statement.arrow_forwardFor 20Y2, McDade Company reported a decline in net income. At the end of the year, T. Burrows, the president, is presented with the following condensed comparative income statement: Please see the attachment for details: Instructions1. Prepare a comparative income statement with horizontal analysis for the two-year period, using 20Y1 as the base year. Round percentages to one decimal place.2. To the extent the data permit, comment on the significant relationshipsrevealed by the horizontal analysis prepared in (1).arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Financial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage LearningFinancial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage Learning
Financial Accounting
Accounting
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning
Financial Accounting
Accounting
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Cengage Learning