According to the producer price index database maintained by the Bureau of Labor Statistics, the averagecost of computer equipment fell 3.8 percent between January and December 2016.Required:ts1. Conduct a horizontal analysis by calculating the year-over-year changes in each line item, expressed indollars and in percentages for the income statement of Computer Tycoon Inc. for the year endedDecember 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 perdollar of sales in 2016 compared to 2015?еВookHintPrintComplete this question by entering your answers in the tabs below.eferencesReq 1Reg 2AReg 2BConduct a horizontal analysis by calculating the year-over-year changes in each line item, expressed in dollars and inpercentages for the income statement of Computer Tycoon Inc. for the year ended December 31, 2016. (Decreases should beindicated by a minus sign. Round percentage values to 1 decimal place.)COMPUTER TYCOON, INC.Income StatementsFor the Year Ended December 31Change in20162015DollarsPercentageSales Revenue$114,000 $141.000%Cost of Goods Sold67,00077,100Gross Profit47,00063,900%Selling, General, and Administrative Expenses37,40039,800Interest Expense640545%Income before Income Tax Expense8,96023,555Income Tax Expense2,0006,400Net Income$6,960$17,155% According to the producer price index database maintained by the Bureau of Labor Statistics, the averagecost 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 indollars and in percentages for the income statement of Computer Tycoon Inc. for the year endedDecember 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 perdollar of sales in 2016 compared to 2015?Complete this question by entering your answers in the tabs below.Req 1Req 2AReq 2BConduct a vertical analysis by expressing each line as a percentage of total revenues. (Round percentage values to 1 decimalplace.)COMPUTER TYCOON, INC.Income StatementsFor the Year Ended December 3120162015Sales Revenue$114,000%141,000%%%%%%%Cost of Goods Sold67,000%77,100Gross Profit47,000%63,900Selling, General, and Administrative Expenses37,400%39,800Interest Expense640%545Income before Income Tax Expense8,960%23,555Income Tax ExpenseNet Income2,000%6,400$6,960%$17,155%< Req 1Req 2B >

Solution: Introduction: Horizontal Analysis which is also known as the trend analysis. It provides a…

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?

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?

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter16: Financial Statement Analysis

Section: Chapter Questions

Problem 3E

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