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 61,100 2012 $ 117,488 70,493 19:11 Gross Profit Selling. General, and Administrative Expenses Interest Expense 38,000 32,300 570 46,995 32,300 448 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 Horimallar Arubarranea inhalathinistar ek winnen 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) 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 % % $ 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.) 1:18:40 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 % 2012 $ 117,488 70,493 46,995 32,300 448 14 247 4,545 $ 9,702 2 RRR % 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 % 2012 $ 117,488 70,493 46,995 32,300 448 14,24 4,545 $ 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? O No Yes