1.

Vertical analysis of income statement

For 20Y2, Tri-Comic Company initiated a sales promotion campaign that included the expenditure of an additional $50,000 for advertising. At the end of the year, Lumi Neer, the president, is presented with the following condensed comparative income statement:

Tri-Comic Company Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1

Line Item Description	20Y2	20Y1
Sales	$1,500,000	$1,250,000
Cost of goods sold	(510,000)	(475,000)
Gross profit	$990,000	$775,000
Selling expenses	$(270,000)	$(200,000)
Administrative expenses	(180,000)	(156,250)
Total operating expenses	$(450,000)	$(356,250)
Operating income	$540,000	$418,750
Other revenue	60,000	50,000
Income before income tax expense	$600,000	$468,750
Income tax expense	(450,000)	(375,000)
Net income	$150,000	$93,750

Question Content Area

1. Prepare a comparative income statement for the two-year period, presenting an analysis of each item in relationship to sales for each of the years. Round percentages to one decimal place. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Tri-Comic Company Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1

Line Item Description	20Y2 Amount	20Y2 Percent	20Y1 Amount	20Y1 Percent
Sales
Cost of goods sold
Gross profit
Selling expenses
Administrative expenses
Total operating expenses
Operating income
Other revenue
Income before income tax expense
Income tax expense
Net income

2.

Analyze and compare Amazon.com, Best Buy, and Walmart

The condensed income statements through operating income for Amazon.com, Inc. (AMZN), Best Buy Co., Inc. (BBY), and Walmart Inc. (WMT) for a recent fiscal year follow (in millions):

Line Item Description	Amazon	Best Buy	Walmart
Sales	$280,522	$43,638	$523,964
Cost of sales	(165,536)	(33,590)	(394,605)
Gross profit	$114,986	$10,048	$129,359
Selling, general, and administrative expenses	(100,244)	(7,998)	(108,791)
Operating expenses	(201)	(41)	0
Operating income	$14,541	$2,009	$20,568

Question Content Area

1. Prepare comparative common-sized income statements for each company. Round percentages to one decimal place. If percentages is zero, enter "0". For those boxes in which you must enter subtractive or negative numbers use a minus sign. (Example: -300)

Comparative Income statements

Line Item Description	Amazon	Best Buy	Walmart
Sales
Cost of sales
Gross profit
Selling, general, and administrative expenses
Operating expenses
Operating income

3.

Analyze and compare Alphabet, PepsiCo, and Caterpillar

The following table shows the stock price, earnings per share, and dividends per share for Alphabet Inc. (GOOG), PepsiCo, Inc. (PEP), and Caterpillar Inc. (CAT) for a recent year:

Line Item Description	Alphabet	PepsiCo	Caterpillar
Market price of common stock at year-end	$1,339.39	$136.67	$147.68
Earnings per share	49.59	5.23	10.85
Dividends per share	0.00	3.79	3.80

1. For each company, determine the:

a. Price-earnings ratio: Divide common market price per share by common earnings per share. Round your answers to two decimals.

Company	Price-earnings ratio
Alphabet:
PepsiCo:
Caterpillar:

b. Dividend yield: Divide common dividends per share by common market price per share. Round to one decimal place. If your answer is zero, enter "0".

Company	Dividend yield
Alphabet:
PepsiCo:
Caterpillar: