Question
Assume the average cost of computer equipment fell 22.3 percent between 2012 and 2013. Lets see whether these changes are reflected in the income statement
Assume the average cost of computer equipment fell 22.3 percent between 2012 and 2013. Lets see whether these changes are reflected in the income statement of Computer Tycoon Inc. for the year ended December 31, 2013. |
2013 | 2012 | |||||
Sales Revenues | $ | 97,500 | $ | 122,469 | ||
Cost of Goods Sold | 60,000 | 73,481 | ||||
Gross Profit | 37,500 | 48,988 | ||||
Selling, General, and Administrative Expenses | 35,200 | 35,200 | ||||
Interest Expense | 400 | 320 | ||||
Income before Income Tax Expense | 1,900 | 13,468 | ||||
Income Tax Expense | 800 | 4,907 | ||||
Net Income | $ | 1,100 | $ | 8,561 | ||
Required: | |
1-a. | Conduct a horizontal analysis by calculating the year-over-year changes in each line item, expressed in dollars and in percentages. (Round your "Percentage" to 1 decimal place. Any decrease in amounts should be indicated with minus sign) |
1-b. | Not available in Connect. |
2-a. | Conduct a vertical analysis by expressing each line as a percentage of total revenues. (Round your answers to 1 decimal place. Input all amounts as positive values.)
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2-b. | Excluding income tax, interest, and selling, general, and administrative expenses, did Computer Tycoon earn more profit per dollar of sales in 2013 compared to 2012? |
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