st 1 -u ($ and units in 000s) Units Sales COGS Gross Profit Selling Expense Administrative Expense Operating Income Other Income (Expense) Net Income 2018 80 1,200 720 480 204 216 60 84 144 100% 2017 62.5 1,000 500 500 250 150 100 0 100 100% Required: Using vertical analysis, evaluate the results of operations in 2017 and 2018. Quantify the percentages of each line item to sales. Evaluate the drivers of net income, including gross profit, selling and administrative expenses, and other income. What is the overall percentage point change in profitability and what is the contribution (positive or negative) of each driver. Explain the effect of each driver on profitability and the possible scenarios of each based on the data above. Which are areas of concern? Which areas are positive? What additional questions would you have? Analysis/Explaination

st 1 -u ($ and units in 000s) Units Sales COGS Gross Profit Selling Expense Administrative Expense Operating Income Other Income (Expense) Net Income 2018 80 1,200 720 480 204 216 60 84 144 100% 2017 62.5 1,000 500 500 250 150 100 0 100 100% Required: Using vertical analysis, evaluate the results of operations in 2017 and 2018. Quantify the percentages of each line item to sales. Evaluate the drivers of net income, including gross profit, selling and administrative expenses, and other income. What is the overall percentage point change in profitability and what is the contribution (positive or negative) of each driver. Explain the effect of each driver on profitability and the possible scenarios of each based on the data above. Which are areas of concern? Which areas are positive? What additional questions would you have? Analysis/Explaination

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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