Chapter 5, Problem 5.1BYP

(a)

(1)

To determine

Income Statement: Income Statement is prepared by all the companies by enumerating all the expenses and revenues in the statement to calculate the resulting difference of Net Profit or Net Loss.

Gross Profit Ratio: Gross Profit Ratio is the ratio that determines the profitability of business as percentage of its net sales. Gross profit ratio shall be calculated as follows:

$\text{Gross}\text{Profit}\text{Ratio}=\frac{\text{Gross}\text{Profit}}{\text{Net}\text{Sales}}\times 100$

To determine: A Company’s percentage change in sales and in 2011 to 2012 and from 2012 to 2013.

(2)

To determine

A Company’s percentage change in net income from 2011 to 2012 and from 2012 to 2013.

(b)

To determine

Gross profit rate in 2011, 2012, and 2013.

(c)

To determine

Percentage of net income to net salesin 2011, 2012, and 2013 and give views about its trend.