Corporate Financial Accounting
14th Edition
ISBN: 9781305653535
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Question
Chapter 14, Problem 14.2APR
To determine
Vertical Analysis
Vertical analysis is prepared to analyze the relationship among various financial statements with a particular base amount.
Formula:
This analysis is otherwise called as common-size statement.
To prepare: Comparative income statement for the two-year period.
Given info: Income statement for the two year period.
To determine
Requirement 2:
To comment: Significant relationships revealed by the horizontal analysis.
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Vertical Analysis of Income Statement
For 20Y2, Tri-Comic Company initiated a sales promotion campaign that included the expenditure of an additional $21,000 for advertising. At the end of the year, Lumi Neer, the president, is presented with the following condensed comparative income statement:
Tri-Comic CompanyComparative Income StatementFor the Years Ended December 31, 20Y2 and 20Y1
20Y2
20Y1
Sales
$741,000
$637,000
Cost of merchandise sold
348,270
337,610
Gross profit
$392,730
$299,390
Selling expenses
$148,200
$121,030
Administrative expenses
74,100
76,440
Total operating expenses
$222,300
$197,470
Income from operations
$170,430
$101,920
Other revenue
29,640
31,850
Income before income tax expense
$200,070
$133,770
Income tax expense
81,510
50,960
Net income
$118,560
$82,810
Required:
Question Content Area
1. Prepare a comparative income statement for the two-year period, presenting an analysis of each item in…
Vertical analysis of income statement
For 20Y2, Tri-Comic Company initiated a sales promotion campaign that included the expenditure of an additional $50,000 for advertising. At the end of the year, Lumi Neer, the president, is presented with the following condensed comparative income statement:
Tri-Comic Company
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
20Y2
20Y1
Sales
$ 1,500,000
$ 1,250,000
Cost of goods sold
(510,000)
(475,000)
Gross profit
$ 990,000
$ 775,000
Selling expenses
$ (270,000)
$ (200,000)
Administrative expenses
(180,000)
(156,250)
Total operating expenses
$ (450,000)
$ (356,250)
Operating income
$ 540,000
$ 418,750
Other revenue
60,000
50,000
Income before income tax expense
$ 600,000
$ 468,750
Income tax expense
(450,000)
(375,000)
Net income
$ 150,000
$ 93,750
1. Prepare a comparative income statement for the two-year period, presenting an analysis of each item in relationship to sales for…
Vertical Analysis of Income Statement
For 20Y2, Tri-Comic Company initiated a sales promotion campaign that included the expenditure of an additional $21,000 for advertising. At the end of the year, Lumi Neer, the president, is presented with the following condensed comparative income statement:
Tri-Comic Company
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
20Y2
20Y1
Sales
$737,000
$634,000
Cost of merchandise sold
353,760
336,020
Gross profit
$383,240
$297,980
Selling expenses
$147,400
$120,460
Administrative expenses
81,070
82,420
Total operating expenses
$228,470
$202,880
Income from operations…
Chapter 14 Solutions
Corporate Financial Accounting
Ch. 14 - Briefly explain the difference between liquidity,...Ch. 14 - What is the advantage of using comparative...Ch. 14 - Prob. 3DQCh. 14 - How would the current and quick ratios of a...Ch. 14 - Prob. 5DQCh. 14 - What do the following data, taken from a...Ch. 14 - A. How does the rate earned on total assets differ...Ch. 14 - Kroger, a grocery store, recently had a...Ch. 14 - Prob. 9DQCh. 14 - Prob. 10DQ
Ch. 14 - Horizontal analysis The comparative accounts...Ch. 14 - Vertical analysis Income statement information for...Ch. 14 - Current position analysis The following items are...Ch. 14 - Accounts receivable analysis A company reports the...Ch. 14 - Inventory analysis A company reports the...Ch. 14 - Prob. 14.6BECh. 14 - Prob. 14.7BECh. 14 - Asset turnover A company reports the following:...Ch. 14 - Prob. 14.9BECh. 14 - Common stockholders' profitability analysis A...Ch. 14 - Earnings per share and price-earnings ratio A...Ch. 14 - Vertical analysis of income statement Revenue and...Ch. 14 - Prob. 14.2EXCh. 14 - Common-sized income statement Revenue and expense...Ch. 14 - Vertical analysis of balance sheet Balance shed...Ch. 14 - Horizontal analysis of the income statement Income...Ch. 14 - Current position analysis The following data were...Ch. 14 - Prob. 14.7EXCh. 14 - Current position analysis The bond indenture for...Ch. 14 - Accounts receivable analysis The following data...Ch. 14 - Accounts receivable analysis Xavier Stores Company...Ch. 14 - Inventory analysis The following data were...Ch. 14 - Inventory analysis QT, Inc. and Elppa Computers,...Ch. 14 - Ratio of liabilities to stockholders' equity and...Ch. 14 - Prob. 14.14EXCh. 14 - Ratio of liabilities to stockholders' equity and...Ch. 14 - Prob. 14.16EXCh. 14 - Profitability ratios The following selected data...Ch. 14 - Profitability ratios Ralph Lauren Corporation...Ch. 14 - Six measures of solvency or profitability The...Ch. 14 - Five measures of solvency or profitability The...Ch. 14 - Earnings per share, price-earnings ratio, dividend...Ch. 14 - Prob. 14.22EXCh. 14 - Earnings per share, discontinued operations The...Ch. 14 - Prob. 14.24EXCh. 14 - Unusual items Explain whether Colston Company...Ch. 14 - Comprehensive Income Anson Industries, Inc....Ch. 14 - Horizontal analysis of income statement For 20V2,...Ch. 14 - Prob. 14.2APRCh. 14 - Prob. 14.3APRCh. 14 - Measures of liquidity, solvency, and profitability...Ch. 14 - Solvency and profitability trend analysis Addai...Ch. 14 - Horizontal analysis of income statement For 20Y2,...Ch. 14 - Prob. 14.2BPRCh. 14 - Effect of transactions on current position...Ch. 14 - Measures of liquidity, solvency and profitability...Ch. 14 - Solvency and profitability trend analysis Crosby...Ch. 14 - Financial Statement Analysis The financial...Ch. 14 - Prob. 14.1ADMCh. 14 - Deere: Profitability analysis Deere Company...Ch. 14 - Marriott and Hyatt: Solvency and profitability...Ch. 14 - Prob. 14.1TIFCh. 14 - Prob. 14.3TIF
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