E13-3 Preparing and Interpreting a Schedule for Horizontal and Vertical Analyses (LO 13-2, LO 13-3, LO 13-5) According to the producer price index database maintained by the Bureau of Labor Statistics, the average cost of computer equipment fell 3.8 percent between January and December 2016. Required: 1. Conduct a horizontal analysis by calculating the year-over-year changes in each line item, expressed in dollars and in percentages for the income statement of Computer Tycoon Inc. for the year ended December 31, 2016. 2-a. Conduct a vertical analysis by expressing each line as a percentage of total revenues. 2-b. Excluding income tax, interest, and operating expenses, did Computer Tycoon earn more profit per dollar of sales in 2016 compared to 2015? Complete this question by entering your answers in the tabs below. Reg 1 Req 2A Req 2B Conduct a horizontal analysis by calculating the year-over-year changes in each line item, expressed in dollars and in percentages for the income statement of Computer Tycoon Inc. for the year ended December 31, 2016. (Decreases should be indicated by a minus sign. Round percentage values to 1 decimal place.) COMPUTER TYCOON, INC. Income Statements For the Year Ended December 31 Change in Dollars Percentage $ $ 2016 107,000 63,500 43,500 36,700 Sales Revenue Cost of Goods Sold Gross Profit Selling, General, and Administrative Expenses Interest Expense Income before Income Tax Expense Income Tax Expense Net Income 2015 130,500 74,300 56,200 38,400 510 17,290 5,700 11,590 570 6,230 1,500 4,730 $ Req 1 Req 2A Req 2B Conduct a vertical analysis by expressing each line as a percentage of total revenues. (Round percentage values to 1 decimal place.) % $ COMPUTER TYCOON, INC. Income Statements For the Year Ended December 31 2016 Sales Revenue $ 107,000 Cost of Goods Sold 63,500 Gross Profit 43,500 Selling, General, and Administrative Expenses 36,700 Interest Expense 570 Income before Income Tax Expense 6,230 Income Tax Expense 1,500 Net Income 4,730 2015 130,500 74,300 56,200 38,400 510 17,290 5,700 11,590 % $ Req 1 Req 2A Req 2B Excluding income tax, interest, and operating expenses, did Computer Tycoon earn more profit per dollar of sales in 2016 compared to 2015? Yes No