Corporate Financial Accounting
15th Edition
ISBN: 9781337398169
Author: Carl Warren, Jeff Jones
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
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.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
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 - The dividend yield of Suburban Propane Partners,...Ch. 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 - To determine: Times interest earned ratio Given...Ch. 14 - Asset turnover A company reports the following:...Ch. 14 - Return on total assets A company reports the...Ch. 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 - a Current fiscal year income from continuing...Ch. 14 - Common-sized income statement Revenue and expense...Ch. 14 - Vertical analysis of balance sheet Balance shed...Ch. 14 - a. Net income increase, 78,0% Horizontal analysis...Ch. 14 - a. (1) Current year working capital. 1,090,000...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 - a. Mondelez International Inc., 1.4 Ratio of...Ch. 14 - a. YRC, 2.6 Asset turnover Three major segments of...Ch. 14 - Profitability ratios The following selected data...Ch. 14 - a. Year 3 return on total assets. 6.8%...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 - a. Alphabet, 37.9 Price-earnings ratio; dividend...Ch. 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 - Analyze and compare Amazon.com, Best Buy, and...Ch. 14 - Prob. 14.2MADCh. 14 - Analyze Deere Company Deere Company (DE)...Ch. 14 - Analyze and compare Marriott and Hyatt Marriott...Ch. 14 - Prob. 14.1TIFCh. 14 - Prob. 14.3TIF
Knowledge Booster
Similar questions
- Juroe Company provided the following income statement for last year: Juroes balance sheet as of December 31 last year showed total liabilities of 10,250,000, total equity of 6,150,000, and total assets of 16,400,000. Required: 1. Calculate the return on sales. (Note: Round the percent to two decimal places.) 2. CONCEPTUAL CONNECTION Briefly explain the meaning of the return on sales ratio, and comment on whether Juroes return on sales ratio appears appropriate.arrow_forwardSundahl Companys income statements for the past 2 years are as follows: Refer to the information for Sundahl Company above. Required: 1. Prepare a common-size income statement for Year 1 by expressing each line item as a percentage of sales revenue. (Note: Round percentages to the nearest tenth of a percent.) 2. Prepare a common-size income statement for Year 2 by expressing each line item as a percentage of sales revenue. (Note: Round percentages to the nearest tenth of a percent.)arrow_forwardCuneo Companys income statements for the last 3 years are as follows: Refer to the information for Cuneo Company above. Required: 1. Prepare a common-size income statement for Year 1 by expressing each line item as a percentage of sales revenue. (Note: Round percentages to the nearest tenth of a percent.) 2. Prepare a common-size income statement for Year 2 by expressing each line item as a percentage of sales revenue. (Note: Round percentages to the nearest tenth of a percent.) 3. Prepare a common-size income statement for Year 3 by expressing each line item as a percentage of sales revenue. (Note: Round percentages to the nearest tenth of a percent.)arrow_forward
- 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: REFER IMAGE Instructions1. Prepare a comparative income statement for the two-year period, presenting an analysis of each item in relationship to sales for each of the years. (Round percentages to one decimal place.)2. To the extent the data permit, comment on the significant relationships revealed by the vertical analysis prepared in (1).arrow_forwardVertical analysis of income statementFor 20Y2, Tri-Comic Company initiated a sales promotion campaign thatincluded the expenditure of an additional $50,000 for advertising. At theend of the year, Lumi Neer, the president, is presented with the attached condensed comparative income statement: Instructions 1. Prepare a comparative income statement for the two-yearperiod, presenting an analysis of each item in relationship to salesfor each of the years. (Round percentages to one decimal place.)2. To the extent the data permit, comment on the significantrelationships revealed by the vertical analysis prepared in (1).arrow_forwardFor 20Y2, Tri-Comic Company initiated a sales promotion campaigns that included the expenditure of an additional $50,000for advertising. At the end of the year Lumi Neer, the president, is presented with the following condensed comparativeincome statement: please fill the tablearrow_forward
- Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows: Current Year Previous Year Sales $ 2,720,000 $2,050,000 Cost of goods sold 1,675,520 1,111,100 Selling expenses 320,960 319,800 Administrative expenses 424,320 262,400 Income tax expense 152,320 118,900 A. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. Round your percentages answers to one decimal place. Enter all amounts as positive numbers. B. Comment on the significant changes disclosed by the comparative income statement.arrow_forwardVertical Analysis of Income Statement Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows: Current Year Previous Year Sales $4,000,000 $3,600,000 Cost of goods sold 2,280,000 1,872,000 Selling expenses 600,000 648,000 Administrative expenses 520,000 360,000 Income tax expense 240,000 216,000 a. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. Round to the nearest whole percentage. Innovation Quarter Inc. Comparative Income Statement For the Years Ended December 31 Current yearAmount Current yearPercent Previous yearAmount Previous yearPercent Sales $4,000,000 % $3,600,000 % Cost of goods sold (2,280,000) % (1,872,000) % $ % $ % Selling expenses $(600,000) % $(648,000) % Administrative expenses (520,000) % (360,000) % $ % $ % $ % $ % Income tax expense (240,000) % (216,000) % $ % $ % b.…arrow_forwardVertical Analysis of Income Statement Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows: Current Year Previous Year Sales $4,000,000 $3,600,000 Cost of goods sold 2,280,000 1,872,000 Selling expenses 600,000 648,000 Administrative expenses 520,000 360,000 Income tax expense 240,000 216,000 a. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. If required, round percentages to one decimal place. Enter all amounts as positive numbers. Innovation Quarter Inc. Comparative Income Statement For the Years Ended December 31 Current year Amount Current year Percent Previous year Amount Previous year Percent Sales $4,000,000 fill in the blank f86a69fccf96045_1% $3,600,000 fill in the blank f86a69fccf96045_2% Cost of goods sold 2,280,000 fill in the blank f86a69fccf96045_3% 1,872,000 fill in the blank f86a69fccf96045_4% $fill…arrow_forward
- Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows: Current Year Previous Year Sales $ 2,920,000 $2,150,000 Cost of goods sold 1,769,520 1,182,500 Selling expenses 332,880 322,500 Administrative expenses 449,680 279,500 Income tax expense 169,360 116,100 A. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. Round your percentages answers to one decimal place. Enter all amounts as positive numbers. B. Comment on the significant changes disclosed by the comparative income statement. Innovation Quarter Inc. Comparative Income Statement For the Years Ended December 31 1 Current year Current year Previous year Previous year 2 Amount Percent Amount Percent 3 Sales $2,920,000.00 $2,150,000.00 4 Cost of goods sold 1,769,520.00 1,182,500.00 5 Gross profit $1,150,480.00…arrow_forwardVertical analysisarrow_forwardVertical Analysis of Income Statement Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows: Current Year Previous Year Sales $457,000 $407,000 Cost of goods sold 283,340 231,990 Selling expenses 68,550 69,190 Administrative expenses 77,690 65,120 Income tax expense 9,140 16,280 a. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. If required, round percentages to one decimal place. Enter all amounts as positive numbers. Innovation Quarter Inc. Comparative Income Statement For the Years Ended December 31 Current year Amount Current year Percent Previous year Amount Previous year Percent Sales $457,000 % $407,000 % Cost of goods sold 283,340 231,990 % % % Selling expenses 68,550 % 69,190 Administrative expenses 77,690 % 65,120 % % % % % Income tax expense 9,140 % 16,280 % % % b. The vertical analysis indicates that the cost of goods sold as a percent of sales by 5 percentage points, while selling…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Survey of Accounting (Accounting I)AccountingISBN:9781305961883Author:Carl WarrenPublisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Survey of Accounting (Accounting I)
Accounting
ISBN:9781305961883
Author:Carl Warren
Publisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning