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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 through operating income for two recent years are as follows (in thousands): a. Prepare a vertical analysis of the two income statements. Round percentages to one decimal place. b. Interpret the vertical analysis.

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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 3, Problem 4MAD
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 through operating income for two recent years are as follows (in thousands):

Chapter 3, Problem 4MAD, Analyze Chipotle Mexican Grill Chipotle Mexican Grill, Inc. (CMG) is a quick-service restaurant

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

b. Interpret the vertical analysis.

a.

To determine

Prepare a vertical analysis of the two income statements.

Explanation of Solution

Vertical analysis: The comparison of an item of a financial statement against the total amount of the same financial statement, to determine the relation between the two items, is referred to as vertical analysis. This analysis is also known as common size analysis. The vertical analysis percentage is calculated by using the formula:

Vertical analysis=Financial statement itemsBase amount×100

Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

Prepare a vertical analysis of the two income statements.

Incorporation CMG
Income Statements
For the years ended December 31
ParticularsYear 2Year 1
Amount ($)PercentAmount ($)Percent
Revenues$3,904,384100

b.

To determine

Interpret the vertical analysis.

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Chapter 3 Solutions

Financial And Managerial Accounting
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