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Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883

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Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883
Textbook Problem

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.

To determine

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

Explanation

The Comparative Common Size Statements are prepared as follows:

    Common Size Income Statement
    AppleBest Buy
    Million $ Common Size %Million $Common Size %
    A B = A / SalesC D = C / Sales
    Sales $ 233,715 100.0% $ 40,339 100.0%
    Cost of Goods sold $(140,089)-59...

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