Problem # 4 - Horizontal & Vertical Financial Analysis Assume the average cost of computer equipment fell 218 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 $99,200 61,200 2012 $123.885 74,331 Gross Profit Selling, General, and Administrative Expenses Interest Expense 38,000 31,000 572 49,554 31,000 260 Income before Income Tax Expense Income Tax Expense 6,428 3,398 18,294 5,600 Net Income $ 3,030 $ 12,694 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 $ Sales revenues Costs of goods sold Gross profit 2013 99,200 $ 61,200 38,000 2012 123,885 74,331 49,554 % % % 4 . Saved ART 2 - Problems 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 $ Sales revenues Costs of goods sold Gross profil Selling, general, and Administrative expenses Interest expense Income before income tax expense Income tax expense Net Income 2013 99,200 $ 61,200 38.000 31.000 572 6,428 3,398 3,030 $ 2012 123,885 74,331 49,554 31,000 260 18,294 5,600 12,694 % % % %6 % % % $ 1-b. Not available in Connect Saved est - PART 2 - Problems Income before income tax expense Income tax expense Net income 6.428 3,398 3,030 18 294 5,600 12 694 $ $ } 1-b. Not available in Connect 34:06 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.) % 96 COMPUTER TYCOON, INC. Vertical Analysis of Income Statements For the Years Ended December 31 2013 Sales revenues $ 99 200 Costs of goods sold 61 200 Gross profit 38,000 Selling, general, and Administrative expenses 31,000 Interest expense 572 Income before income tax expense 6,428 Income tax expense 3,398 % Net income $ 3,030 See 2012 S 123 885 74331 49,554 31.000 260 18.294 5 600 $ 12.6941 % % 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