Horizontal analysis of income statement: In horizontal analysis of income statement, the amount of each item of the current year financial statement is compared with the previous year financial statement. The amount of each item increased or decreased in the current income statement, and its respective percentage can be computed by taking the earlier statement as the base. To determine: The amount of change in millions, and the percentage of change from the prior year to the recent year.

Question

Horizontal Analysis of Income Statement The following data (in millions) are taken from the financial statements of Tarrow Corporation: Recent Year Prior Year Revenue $320,724 $302,000 Operating expenses 271,135 257,000 Operating income $49,589 $45,000 a. For Tarrow Corporation, 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: Revenue Operating expenses Operating income Amount of Change(in millions) Percent of Change(round to 1 decimal place) Increase or Decrease 1. Revenue 2. Operating expenses 3. Operating income b. During the recent year, revenue _____________ and operating expenses____________ . As a result, operating income ___________ , from the prior year.

Answer 1

Question

Chapter 2, Problem 2.23EX

a.

To determine

Horizontal analysis of income statement:

In horizontal analysis of income statement, the amount of each item of the current year financial statement is compared with the previous year financial statement. The amount of each item increased or decreased in the current income statement, and its respective percentage can be computed by taking the earlier statement as the base.

To determine: The amount of change in millions, and the percentage of change from the prior year to the recent year.

b.

To determine

To discuss: The conclusions drawn from the analysis of the revenue, and the operating expenses.

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