Survey of Accounting (Accounting I)
Solutions
Survey of Accounting (Accounting I)
Vertical analysis
The condensed income statements through operating income for Apple Inc. and 8est Buy Co. Inc. (BBY) are reproduced below for recent fiscal years (numbers in millions of dollars)
Prepare comparative common-sized statements, rounding percents to one decimal place. Interpret the analyses.
Concept Introduction:
Common Size Financial Statement:
Common Size Analysis is prepared in a % format which shows a readymade analysis for the financial statements. For the Income statement, the common size format shows all the amounts as a % of sales revenue and for the Balance sheet, the common size format shows each items of the balance sheet as a % of the Total assets amount.
To Prepare:
The Comparative Common Size Statements
The Comparative Common Size Statements are prepared as follows:
| Common Size Income Statement | ||||
| Apple | Best Buy | |||
| Million $ | Common Size % | Million $ | Common Size % | |
| A | B = A / Sales | C | D = C / Sales | |
| Sales | $ 233,715 | 100.0% | $ 40,339 | 100.0% |
| Cost of Goods sold | $(140,089) | -59... | ||
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