A.
Vertical analysis
Vertical analysis is the method of financial statement analysis, and it is useful for evaluating company’s performance and financial condition. Vertical analysis is helpful for analyzing the changes in the financial statements over the time, and comparing each item on a financial statement with a total amount from the same statement.
EBITDA:
EBITA is operating income that is expressed by adding back
To prepare: A vertical analysis of the sales as a percent of total sales for the five segments.
B.
To interpret: The vertical analysis of the segment sale of Company LM.
C.
(1) EBITDA, and (2) EBITDA as a percent of sales (EBITDA margin) for each segment.
D.
To prepare: A column bar chart of the EBITDA as a percent of sales for the descending order.
E.
To interpret: The analysis in EBITDA margin calculated in Part D.
Want to see the full answer?
Check out a sample textbook solutionChapter 6 Solutions
Bundle: Managerial Accounting, Loose-leaf Version, 14th - Book Only
- LVMH: Group segment sales and EBITDA analysis LVMH Group is a French domiciled company known for Dior, Givenchy, Louis Vuitton, and many other fashion brands. LVMH's operating segment revenues, operating income, and depreciation and amortization expenses for a recent year are as follows (in millions of euros): A. Prepare a vertical analysis of the segment sales to total sales. (Round to nearest whole percent.) B. Interpret the vertical analysis in (A). C. Compute (1) EBITDA and (2) EBITDA as a percent of sales (EBITDA margin) for each segment. (Round to nearest whole percent.) D. Prepare a column bar chart of the EBITDA as a percent of sales for the segments in descending order. E. Interpret the chart in (D).arrow_forwardExcel Online Structured Activity: Balance Sheet Analysis Consider the following financial data for J. White Industries: Total assets turnover: 1.2Gross profit margin on sales: (Sales - Cost of goods sold)/Sales = 27%Total liabilities-to-assets ratio: 45%Quick ratio: 0.90Days sales outstanding (based on 365-day year): 29.5 daysInventory turnover ratio: 4.0 The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Open spreadsheet Complete the balance sheet and sales information in the table that follows for J. White Industries. Do not round intermediate calculations. Round your answers to the nearest whole dollar. Partial Income StatementInformation Sales $ fill in the blank 2 Cost of goods sold $ fill in the blank 3 Balance Sheet Cash $ fill in the blank 4 Accounts payable $ fill in the blank 5 Accounts receivable $ fill in the blank 6 Long-term debt $…arrow_forwardAssume that you are purchasing an investment and have decided to invest in a company in the digital phone business. You have narrowed the choice to Digitized Corp. and Very Network, Inc. and have assembled the following data. LOADING... (Click to view the income statement data.) Data Table Selected income statement data for the current year: Digitized Very Network Net Sales Revenue (all on credit) $418,290 $494,940 Cost of Goods Sold 210,000 256,000 Interest Expense 0 15,000 Net Income 62,000 70,000 (Click to view the balance sheet and market price data.) Data Table Selected balance sheet and market price data at the end of the current year: Digitized Very Network Current Assets: Cash $24,000 $21,000 Short-term Investments 42,000 19,000 Accounts Receivables, Net 36,000 46,000 Merchandise Inventory 67,000 98,000 Prepaid Expenses 22,000 18,000 Total…arrow_forward
- Benchmark analysis: Trademark Corp.'s financial manager collected the following information for its peer group to compare its performance against that of its peers. Ratios Trademark Peer Group DSO 33.5 days 27.9 days Total assets turnover 2.3 3.7 Inventory turnover 1.8 2.8 Quick ratio 0.6 1.3 (a) Explain how Trademark is performing relative to its peers. (b) How do the industry ratios help Trademark's management?arrow_forwardGiven the income statement below, Mega Trade Inc. wants to find the resulting net income for the year 2018 (in million). What is the right amount? Income Statement ($ Million) YEAR END YEAR END YEAR END YEAR END 2015 2016 2017 2018 Sales 1,234.90 1,251.70 1,300.40 1,334.40 Cost Sales -679.1 -659 -681.3 -667 Gross Operating Income Selling & Administration -339.7 -348.6 -351.2 -373.3 Depreciation -47.5 -52 -55.9 -75.2 Other Income/Expenses 11.8 7.6 7 8.2 Earnings Before Interest and Taxes Interest Income 1.3 1.4 1.7 2 Interest Expense -16.2 -15.1 -20.5 -23.7 Pre Tax Income Income Taxes -56.8 -64.2 -67.5 -72.6 Net Income Dividends -38.3 -38.7 -39.8 -40.1 Addition to Retained Earningsarrow_forwardVertical analysis (common-size) percentages for Cullumber Company’s sales revenue, cost of goods sold, and expenses are listed here. Vertical Analysis 2022 2021 2020 Sales revenue 100.0 % 100.0 % 100.0 % Cost of goods sold 60.0 64.2 65.6 Expenses 24.7 27.1 29.5 Calculate Cullumber’s net income as a percent of sales. (Round answers to 1 decimal place, e.g. 5.2.) 2022 2021 2020 Net income Enter percentages rounded to 1 decimal place. Enter percentages rounded to 1 decimal place. Enter percentages rounded to 1 decimal place. Did Cullumber’s net income as a percent of sales increase, decrease, or remain unchanged over the 3-year period? Cullumber’s net income as a percent of sales Choose the correct answer increaseddecreasedremained unchangedarrow_forward
- Starbucks Corporation reported the following geographical segment revenues for a recent and a prior fiscal year: Recent Year Prior Year (in millions, rounded) (in millions, rounded) Americas $13,293 $11,980 EMEA* 1,217 1,295 China/Asia Pacific 2,396 1,130 Channel Development** 1,731 1,546 Other 526 497 $19,163 $16448 Total *Europe, Middle East, and Africa **Sells packaged coffee and teas globally a. Prepare a horizontal analysis of the segment data using the prior year as the base year. Round whole percents to one decimal place. b. Prepare a vertical analysis of the segment data. Round whole percents to one decimal place. c. What conclusions can be drawn from your analyses?arrow_forwardPayton Company has the following segment revenues for the two most recent fiscal years. Segment Current Year (in millions) Prior Year (in millions) China $770 $650 Canada 326 240 Other countries 212 168 Total revenues $1,308 $1,058 Prepare a vertical analysis of the segment data. Calculate the percentage to four decimal places, then round your answer to one decimal place. Payton Company Vertical Analysis Current Year Prior Year Current Year Percent Prior Year Segment Amount Amount Percent (in millions) (in millions) China $770 $650 % Canada 326 240 Other countries 212 168 Total revenues $1,308 $1,058 Previous Nextarrow_forwardGame-On Sports operates in two distinct segments: athletic equipment and accessories. The income statement for each operating segment is presented below.Required:1. Complete the "%" columns to be used in a vertical analysis of Game-On Sports’ two operating segments. Express each amount as a percentage of sales. (Round your percentage answers to 1 decimal place.) GAME-ON SPORTS Income Statement For the Year Ended December 31, 2021 Athletic Equipment Accessories Amount % Amount % Net sales $2,800,000 $3,250,000 Cost of goods sold 1,250,000 1,620,000 Gross profit 1,550,000 1,630,000 Operating expenses 650,000 700,000 Operating income 900,000 930,000 Other income (expense) 75,000 (10,000) Income before tax 975,000 920,000 Income tax expense 225,000 200,000 Net income $750,000 $720,000 2. Use vertical analysis to compare the profitability of the two operating segments. Which segment is more…arrow_forward
- ces Required: a. Firm D has net income of $91,936, sales of $1,436,500, and average total assets of $845,000. Calculate the firm's margin, turnover, and ROI. b. Firm E has fet income of $174,195, sales of $2,205,000, and ROI of 11.85%. Calculate the firm's turnover and average total assets. c. Firm F has ROI of 15.80%, average total assets of $1,880,000, and turnover of 0.8. Calculate the firm's sales, margin, and net income. Complete this question by entering your answers in the tabs below. Required A Required B Required C Firm E has net income of $174,195, sales of $2,205,000, and ROI of 11.85%. Calculate the firm's turnover and average total assets. Note: Do not round intermediate calculations. Round "Turnover" answer to 1 decimal place. Turnover Average total assetsarrow_forwardGiven the income statement below, Mega Trade Inc. wants to find the resulting net income for the year 2016 (in million). What is the right amount? Income Statement ($ Million) YEAR END YEAR END YEAR END YEAR END 2015 2016 2017 2018 Sales 1,234.90 1,251.70 1,300.40 1,334.40 Cost Sales -679.1 -659 -681.3 -667 Gross Operating Income Selling & Administration -339.7 -348.6 -351.2 -373.3 Depreciation -47.5 -52 -55.9 -75.2 Other Income/Expenses 11.8 7.6 7 8.2 Earnings Before Interest and Taxes Interest Income 1.3 1.4 1.7 2 Interest Expense -16.2 -15.1 -20.5 -23.7 Pre Tax Income Income Taxes -56.8 -64.2 -67.5 -72.6 Net Income Dividends -38.3 -38.7 -39.8 -40.1arrow_forwardSegment analysis for a service company Charles Schwab Corporation (SCHW) is one of the more innovative brokerage and financial service companies in the United States. The company recently provided information about its major business segments as follows (in millions): InvestorServices AdvisorServices Revenues $5,411 $2,067 Operating income 2,031 962 Depreciation 180 54 a. The Investor Services segment serves the retail customer, you and me. These are the brokerage, Internet, and mutual fund services used by individual Investors. The Advisor Services segment includes the same services provided for financial institutions, such as banks, mutual fund managers, insurance companies, and pension plan administrators. b. Indicate whether the following costs are a “Variable Cost” or a “Fixed Cost” in the “Investor Services” segment. 1. Commissions to brokers Variable Cost 2. Fees paid to exchanges for executing trades Variable Cost 3. Depreciation on brokerage…arrow_forward
- Financial & Managerial AccountingAccountingISBN:9781337119207Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage LearningManagerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College PubFinancial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
- Financial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage LearningFinancial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage Learning