Financial Accounting
14th Edition
ISBN: 9781305088436
Author: Carl Warren, Jim Reeve, Jonathan Duchac
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 17, Problem 1PA
1.
To determine
Prepare horizontal analysis of the comparative income statement of Company C.
2.
To determine
Comment significant relationships revealed by the horizontal analysis.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
For 2014, Lindell Company reported its most significant decline in net income in years. At the end of the year, H. Finn, the president, is presented with the following condensed comparative income statement:
Instructions1. Prepare a comparative income statement with horizontal analysis for the two-year period, using 2013 as the base year. Round to one decimal place.2. To the extent the data permit, comment on the significant relationships revealed by the horizontal analysis prepared in(1).
For 20Y2, Macklin Inc. reported a significant increase in net income. At the end of the year, John Mayer, the president, is presented with the following condensed comparative income statement:
Please see the attachment for details:
Instructions1. Prepare a comparative income statement with horizontal analysis for the two-year period, using 20Y1 as the base year. Round percentages to one decimal place.2. To the extent the data permit, comment on the significant relationships revealed by the horizontal analysis prepared in (1).
For 20Y2, McDade Company reported a decline in net income. At the end of the year, T. Burrows, the president, is presented with the following condensed comparative income statement:
Please see the attachment for details:
Instructions1. Prepare a comparative income statement with horizontal analysis for the two-year period, using 20Y1 as the base year. Round percentages to one decimal place.2. To the extent the data permit, comment on the significant relationshipsrevealed by the horizontal analysis prepared in (1).
Chapter 17 Solutions
Financial Accounting
Ch. 17 - Prob. 1DQCh. 17 - What is the advantage of using comparative...Ch. 17 - Prob. 3DQCh. 17 - How would the current and quick ratios of a...Ch. 17 - Prob. 5DQCh. 17 - What do the following data, taken from a...Ch. 17 - a. How does the rate earned on total assets differ...Ch. 17 - Kroger, a grocery store, recently had a...Ch. 17 - Prob. 9DQCh. 17 - Prob. 10DQ
Ch. 17 - Prob. 1PEACh. 17 - Prob. 1PEBCh. 17 - Prob. 2PEACh. 17 - Vertical analysis Income statement information for...Ch. 17 - Prob. 3PEACh. 17 - Prob. 3PEBCh. 17 - Prob. 4PEACh. 17 - Prob. 4PEBCh. 17 - Prob. 5PEACh. 17 - Inventory analysis A company reports the...Ch. 17 - Prob. 6PEACh. 17 - Prob. 6PEBCh. 17 - Times interest earned A company reports the...Ch. 17 - Times interest earned A company reports the...Ch. 17 - Asset turnover A company reports the following:...Ch. 17 - Asset turnover A company reports the following:...Ch. 17 - Prob. 9PEACh. 17 - Prob. 9PEBCh. 17 - Common stockholders' profitability analysis A...Ch. 17 - Common stockholders' profitability analysis A...Ch. 17 - Earnings per share and price-earnings ratio A...Ch. 17 - Earnings per share and price-earnings ratio A...Ch. 17 - Revenue and expense data for Gresham Inc. for two...Ch. 17 - Prob. 2ECh. 17 - Common-sized income statement Revenue and expense...Ch. 17 - Prob. 4ECh. 17 - Prob. 5ECh. 17 - The following data were taken from the balance...Ch. 17 - Prob. 7ECh. 17 - The bond indenture for the 10-year, 9% debenture...Ch. 17 - The following data are taken from the financial...Ch. 17 - Prob. 10ECh. 17 - The following data were extracted from the income...Ch. 17 - Prob. 12ECh. 17 - Ratio of liabilities to stockholders equity and...Ch. 17 - Hasbro and Mattel, Inc., are the two largest toy...Ch. 17 - Ratio of liabilities to stockholders equity and...Ch. 17 - Three major segments of the transportation...Ch. 17 - Prob. 17ECh. 17 - Profitability ratios Ralph Lauren Corporation...Ch. 17 - The following data were taken from the financial...Ch. 17 - The balance sheet for Garcon Inc. at the end of...Ch. 17 - Earnings per share, price-earnings ratio, dividend...Ch. 17 - The table that follows shows the stock price,...Ch. 17 - Earnings per share, discontinued operations The...Ch. 17 - Prob. 24ECh. 17 - Prob. 25ECh. 17 - Unusual items Explain whether Colston Company...Ch. 17 - Prob. 1PACh. 17 - For 2016, Indigo Company initiated a sales...Ch. 17 - Effect of transactions on current position...Ch. 17 - The comparative financial statements of Bettancort...Ch. 17 - Addai Company has provided the following...Ch. 17 - Prob. 1PBCh. 17 - Prob. 2PBCh. 17 - Effect of transactions on current position...Ch. 17 - Prob. 4PBCh. 17 - Crosby Company has provided the following...Ch. 17 - Financial Statement Analysis The financial...Ch. 17 - Prob. 1CPCh. 17 - Prob. 2CPCh. 17 - The condensed income statements through income...Ch. 17 - Prob. 4CPCh. 17 - Marriott International, Inc., and Hyatt Hotels...
Knowledge Booster
Similar questions
- The following data (in millions) were taken from the financial statements of Costco Wholesale Corporation: a. For Costco, determine the amount of change in millions and the percent of change (round to one decimal place) from the prior year to the recent year for: 1. Revenue 2. Operating expenses 3. Operating income b. Comment on the results of your horizontal analysis in part (a). c. Based upon Exercise 2-23, compare and comment on the operating results of Target and Costco for the recent year.arrow_forwardAccess the February 21, 2017, filing of the December 31, 2016, 10-K report of The Hershey Company (ticker: HSY) at SEC.gov and complete the following requirements. Required Compute or identify the following profitability ratios of Hershey for its years ending December 31, 2016, and December 31, 2015. Interpret its profitability using the results obtained for these two years. 1. Profit margin ratio (round the percent to one decimal). 2. Gross profit ratio (round the percent to one decimal). 3. Return on total assets (round the percent to one decimal). (Total assets at year-end 2014 were $5,622,870 in thousands.) 4. Return on common stockholders’ equity (round the percent to one decimal). (Total shareholders’ equity at year-end 2014 was $1,519,530 in thousands.) 5. Basic net income per common share (round to the nearest cent).arrow_forwardHorizontal analysis of income statementFor 2012, McDade Company reported a decline in net income. At the endof the year, T. Burrows, the president, is presented with the followingcondensed comparative income Statement: Instructions 1. Prepare a comparative income statement with horizontal analysis forthe two-year period, using 20Y1 as the base year. Round percentages toone decimal place.2. To the extent the data permit, comment on the significant relationshipsrevealed by the horizontal analysis prepared in (1).arrow_forward
- Please describe what is meant by “Times Interest Earned.” How is it calculated? Suppose you calculated this ratio for a company for two consecutive years and the results were the following: year 2018 – 24.0 year 2017 – 28.0 Please interpret the results. What conclusions can you draw?arrow_forwardA condensed income statement for Weber Associates and a partially completed vertical analysis follow. Required: 1. Complete the vertical analysis by computing each missing line item as a percentage of net revenues. TIP: In the prior year, Cost of Goods Sold was 31 percent of Net Revenues, computed as ($1,397 ÷ $4,571). 2. Does Cost of Goods Sold, as a percentage of Net Revenues, represent better or worse performance in 2019 as compared to 2018? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Complete the vertical analysis by computing each missing line item as a percentage of net revenues. TIP: In the prior year, Cost of Goods Sold was 31 percent of Net Revenues, computed as ($1,397 ÷ $4,571). (Decreases should be indicated by a minus sign. Round your answers to the nearest whole percent.) Net Revenues Cost of Goods Sold Research and Development Expense Sales and Marketing Expense General and Administrative Expense Income from Operations Other…arrow_forwardA. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous year. Round percentages to one decimal place. B. What conclusions can be drawn from the horizontal analysis? Round the answers to one decimal place.arrow_forward
- Prepare a horizontal analysis of the income statement data for Georgia Development Corporation using 2016 as a base. (If amount and percentage are a decrease show the numbers as negative, e.g. -55,000, -12.1% or (55,000), (12.1%). Round percentages to 1 decimal place, e.g. 12.1%.) GEORGIA DEVELOPMENT CORPORATION Condensed Income Statements Increase or (Decrease) During 2017 December 31, 2017 December 31, 2016 Amount Percentage Net sales $600,000 $500,000 %24 Cost of goods sold 414,000 350,000 Gross profit 186,000 150,000 Operating expenses 150,000 120,000 % Net income $36,000 $30,000 % SHOW SOLUTION SHOW ANSWER LINK TO TEXTarrow_forwardCompute the following profitability ratios of the company for the most recent two years, show all values in the computations: 1.Asset Turnover 2.Profit margin ratio(Net Income/Net Sales) 3.Return on total assets (Net Income/Average Total Assets) 4.Return on stockholders’ equity 5.Basic Earnings per share (EPS) Based on the results above, what conclusions can you make about the company’s overall profitability and efficient use of assets?arrow_forwardN1. Accountarrow_forward
- Conduct a vertical analysis (common-size financial statements). Comment on the components of the financial statements by year and its trend for the last three years. (Note: please see second picture as example for vertical analysis. The first picture is the given.)arrow_forwardRequired 1. Compute each year’s current ratio. Round ratios to one decimal. 2. Express the income statement data in common-size percents. Round percents to two decimals. 3. Express the balance sheet data in trend percents with 2017 as the base year. Round percents to two decimals. Analysis Component 4. Comment on any significant relations revealed by the ratios and percents computed.arrow_forwardBegin by calculating the gross profit for each year, then prepare a horizontal analysis of revenues and gross profitlong dash—both in dollar amounts and in percentageslong dash—for 20192019 and 20182018. (Enter amounts in millions as provided to you in the problem statement. Round the percentages to one decimal place, X.X%. Use a minus sign or parentheses to indicate a decrease.) McDonald Corp. Income Statement - (Partial) Years Ended December 31, 2019 and 2018 (Amounts in millions) 2019 2018 2017 Revenues $9,575 $9,300 $8,975 Cost of Goods Sold 6,250 6,000 5,890 Gross Profitarrow_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 PubFinancial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage LearningManagerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
- Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage LearningFinancial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Financial Accounting
Accounting
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
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
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
Financial Accounting
Accounting
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning