Assume the average cost of computer equipment fell 20.9 percent between 2016 and 2017. Let?s see whether

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Assume the average cost of computer equipment fell 20.9 percent between 2016 and 2017. Let?s see whether these changes are reflected in the income statement of Computer Tycoon Inc. for the year ended December 31, 2017.

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Required:

1. Conduct a horizontal analysis by calculating the year-over-year changes in each line item, expressed in dollars and in percentages (rounded to one decimal place). How did the change in computer prices compare to the changes in Computer Tycoon?s sales revenues?

2. Conduct a vertical analysis by expressing each line as a percentage of total revenues (rounded to one decimal place). Excluding income tax, interest, and selling, general, and administrative expenses, did Computer Tycoon earn more profit per dollar of sales in 2017 compared to 2016?

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Related Book For  book-img-for-question

Fundamentals of Financial Accounting

ISBN: 978-1259269868

5th Canadian edition

Authors: Fred Phillips, Robert Libby, Patricia Libby, Brandy Mackintosh

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