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Analyze Chipotle Mexican Grill Chipotle Mexican Grill, Inc. (CMG) is a quick-service restaurant providing a focused menu of burritos, tacos, and salads. Chipotle’s income statements for the end of two recent years are as follows: a. Prepare a horizontal analysis of the two income statements. Round percentages to one decimal place. b. Interpret the horizontal analysis. c. Can you think of a reason why Chipotle’s revenues and operating income may have decreased so significantly in Year 2?

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Financial And Managerial Accounting

15th Edition
WARREN + 1 other
Publisher: Cengage Learning,
ISBN: 9781337902663

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Chapter
Section
BuyFindarrow_forward

Financial And Managerial Accounting

15th Edition
WARREN + 1 other
Publisher: Cengage Learning,
ISBN: 9781337902663
Chapter 2, Problem 2MAD
Textbook Problem
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Analyze Chipotle Mexican Grill

Chipotle Mexican Grill, Inc. (CMG) is a quick-service restaurant providing a focused menu of burritos, tacos, and salads. Chipotle’s income statements for the end of two recent years are as follows:

Chapter 2, Problem 2MAD, Analyze Chipotle Mexican Grill Chipotle Mexican Grill, Inc. (CMG) is a quick-service restaurant

a. Prepare a horizontal analysis of the two income statements. Round percentages to one decimal place.

b. Interpret the horizontal analysis.

c. Can you think of a reason why Chipotle’s revenues and operating income may have decreased so significantly in Year 2?

(a)

To determine

Prepare a horizontal analysis of the income statements.

Explanation of Solution

Horizontal analysis: The comparison of an item of a financial statement of one year against the same item of the same financial statement of another year, to determine the relation between the two items, is referred to as horizontal analysis.

In the horizontal analysis of income statement, the amount of increase or decrease of each item in the curr...

(b)

To determine

Interpret the results of the horizontal analysis.

c.

To determine

Explain the reasons for the decrease in the revenues and operating income in Year 2.

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