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IV. Sean Mendoza, the president of Health Care Products Company, states that large peso amounts on financial statements confuse him. However, he finds that the
IV. Sean Mendoza, the president of Health Care Products Company, states that large peso amounts on financial statements confuse him. However, he finds that the percentage relationships are helpful. For example, he expects cost of goods sold to be 60 percent of net sales, operating expenses to be 20 percent, income taxes to be 7 percent and a net income to be 10 percent. Operating results for 2016 and 2017 are given below in summary: 2016 2017 Net sales Cost of goods sold Gross Profit Operating Expenses Operating Income Income Taxes Net Income P 15,140,000 9,175,000 5,965,000 3,421,000 2,544,00 1,036,000 P1,508,00 P18,534,000 11,523,000 7,011,000 3,906,000 3,105,000 1,233,000 P 1,872,000 Required 1. Prepare the vertical analysis for both years. 2. Prepare horizontal analysis 3. Were the president's expectations realized? Should he worry about certain changes
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