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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Horizontal Analysis Using Income Statements

The consolidated 2019, 2018, and 2017 income statements for Butler Corporation follow.

Chapter 12, Problem 74E, Horizontal Analysis Using Income Statements The consolidated 2019, 2018, and 2017 income statements , example  1

Chapter 12, Problem 74E, Horizontal Analysis Using Income Statements The consolidated 2019, 2018, and 2017 income statements , example  2

Required:

1. Prepare common size income statements for hori7ontal analysis (in percentage terms, rounded to two decimal places). You do not need to include the actual dollar amounts shown above.

2. Indicate what Butler’s 2019, 2018. and 2017 tax rates were on its income before taxes (in percentage terms, rounded to two decimal places).

3. CONCEPTUAL CONNECTION Explain why net income increased by a larger percentage than sales in 2019 and 2018.

To determine

(a)

Introduction:

Common size income statements help to express each financial statement line item as a percentage of the base year.

To prepare:

Common Size income statement in the books of Butler Corporation.

Explanation

The base year is taken as 2017. Each percentage is computed by:

% of sales=Amount of 2019Amo

To determine

(b)

To indicate:

The tax rate for the year 2017, 2018 and 2019 on Butler corporation’s income.

To determine

(c)

To explain:

Why net income increased as a larger percentage of sales in 2018 and 2019.

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Ch-12 P-11DQCh-12 P-12DQCh-12 P-13DQCh-12 P-14DQCh-12 P-15DQCh-12 P-16DQCh-12 P-1MCQCh-12 P-2MCQCh-12 P-3MCQCh-12 P-4MCQCh-12 P-5MCQCh-12 P-6MCQCh-12 P-7MCQCh-12 P-8MCQCh-12 P-9MCQCh-12 P-10MCQCh-12 P-11MCQCh-12 P-12MCQCh-12 P-13MCQCh-12 P-14MCQCh-12 P-15MCQCh-12 P-16MCQCh-12 P-17MCQCh-12 P-18MCQCh-12 P-19MCQCh-12 P-20MCQCh-12 P-21MCQCh-12 P-22MCQCh-12 P-23MCQCh-12 P-24MCQCh-12 P-25MCQCh-12 P-26MCQCh-12 P-27MCQCh-12 P-28MCQCh-12 P-29MCQCh-12 P-30MCQCh-12 P-31MCQCh-12 P-32MCQCh-12 P-33MCQCh-12 P-34MCQCh-12 P-35MCQCh-12 P-36MCQCh-12 P-37MCQCh-12 P-38MCQCh-12 P-39MCQCh-12 P-40MCQCh-12 P-41MCQCh-12 P-42MCQCh-12 P-43MCQCh-12 P-44MCQCh-12 P-45MCQCh-12 P-46CECh-12 P-47CECh-12 P-48CECh-12 P-49CECh-12 P-50CECh-12 P-51CECh-12 P-52CECh-12 P-53CECh-12 P-54CECh-12 P-55CECh-12 P-56CECh-12 P-57BECh-12 P-58BECh-12 P-59BECh-12 P-60BECh-12 P-61BECh-12 P-62BECh-12 P-63BECh-12 P-64BECh-12 P-65BECh-12 P-66BECh-12 P-67BECh-12 P-68ECh-12 P-69ECh-12 P-70ECh-12 P-71ECh-12 P-72ECh-12 P-73ECh-12 P-74ECh-12 P-75ECh-12 P-76ECh-12 P-77ECh-12 P-78ECh-12 P-79ECh-12 P-80ECh-12 P-81ECh-12 P-82ECh-12 P-83ECh-12 P-84PSACh-12 P-85PSACh-12 P-86PSACh-12 P-87PSACh-12 P-88PSACh-12 P-89PSACh-12 P-90PSACh-12 P-91PSACh-12 P-92PSACh-12 P-93PSACh-12 P-84PSBCh-12 P-85PSBCh-12 P-86PSBCh-12 P-87PSBCh-12 P-88PSBCh-12 P-89PSBCh-12 P-90PSBCh-12 P-91PSBCh-12 P-92PSBCh-12 P-93PSBCh-12 P-94CCh-12 P-95.1CCh-12 P-95.2CCh-12 P-96.1CCh-12 P-96.2CCh-12 P-97.1CCh-12 P-97.2CCh-12 P-97.3CCh-12 P-97.4CCh-12 P-97.5CCh-12 P-97.6CCh-12 P-98.1CCh-12 P-98.2CCh-12 P-98.3CCh-12 P-99.1CCh-12 P-99.2CCh-12 P-99.3CCh-12 P-99.4CCh-12 P-99.5C

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