Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Problem # 4 - Horizontal & Vertical Financial Analysis Assume the average cost of computer equipment fell 17.5 percent between 2012 and 2013. Let's see

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Problem # 4 - Horizontal & Vertical Financial Analysis Assume the average cost of computer equipment fell 17.5 percent between 2012 and 2013. Let's see whether these changes are reflected in the income statement of Computer Tycoon Inc. for the year ended December 31, 2013 Sales Revenues Cost of Goods Sold 2013 $ 99,100 61100 2012 $ 117,488 70,493 Gross Profit Selling. General, and Administrative Expenses Interest Expense 38,000 32.300 46.995 32.300 448 570 Income before Income Tax Expense Income Tax Expense 5,130 2.800 14,247 4.545 Net Income $ 2.330 $ 9,702 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 Harimalaca Andorrance in mate chanlal ha indicated with minurrian 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) .00 COMPUTER TYCOON, INC. Vertical Analysis of Income Statements For the Years Ended December 31 Change in Dollars Percentage 2012 $ % % Sales revenues Costs of goods sold Gross profit Selling, general, and Administrative expenses Interest expense Income before income tax expense Income tax expense Net income 2013 99,100 $ 61,100 38,000 32,300 570 5,130 2,800 2,330 $ % 117,488 70,493 46,995 32,300 448 14,247 4,545 9,702 % 96 % $ 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.) 2012 COMPUTER TYCOON, INC. Vertical Analysis of Income Statements For the Years Ended December 31 2013 Sales revenues $ 99,100 Costs of goods sold 61,100 % Gross profit 38,000 % Selling, general, and Administrative expenses 32,300 % Interest expense 570 % Income before income tax expense 5,130 % Income tax expense 2,800 % Net income $ 2,330 % % $ 117,488 70,493 46,995 32,300 448 14,247 4,545 9,702 % % COMPUTER TYCOON, INC. Vertical Analysis of Income Statements For the Years Ended December 31 2013 2012 Sales revenues $ 99,100 % $ 117,488 Costs of goods sold 61,100 70,493 Gross profit 38,000 % 46,995 Selling, general, and Administrative expenses 32,300 % 32,300 Interest expense 570 % 448 Income before income tax expense 5,130 % 14,247 Income tax expense 2,800 % 4,545 Net income $ 2,330 % $ 9,702 % % % % 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? No Yes

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Biometric And Auditing Issues Addressed In A Throughput Model

Authors: Waymond Rodgers

1st Edition

1617356530, 978-1617356537

More Books

Students also viewed these Accounting questions

Question

=+(16.32) 81(w) for w A and 0 Answered: 1 week ago

Answered: 1 week ago