Please answer all parts of the problem. A condensed income statement for Simulte
ID: 2470163 • Letter: P
Question
Please answer all parts of the problem.
A condensed income statement for Simultech Corporation and a partially completed vertical analysis are presented below.
1. Complete the vertical analysis by computing each missing line item as a percentage of sales revenues. (Round your answers to the nearest whole percent.)
2. Does Simultech's Cost of Goods sold for the year ended January 31, 2013, as a percentage of revenues, represent better or worse performance as compared to that for the year ended January 31, 2012? Better Worse
3. Do the percentages that you calculated for net income indicate whether Simultech's net profit margin has increased or decreased over the two years? Increased Decreased
SIMULTECH CORPORATION Income Statement (summarized) (in millions of U.S. dollars) For the Years Ended January 31, 2013 January 31, 2012 Sales Revenues $2,064 100 % $2,550 100 % Cost of Goods Sold 1,547 75 1,811 Selling, General, and Administrative Expenses 423 436 17 Other Operating Expenses 43 2 14 1 Interest Expense 14 17 1 Income before Income Tax Expense 37 2 272 Income Tax Expense 6 0 31 1 Net Income $31 % $241Explanation / Answer
1. Complete the vertical analysis by computing each missing line item as a percentage of sales revenues. (Round your answers to the nearest whole percent.)
Answer:
SIMULTECH CORPORATION
Income Statement (summarized)
(in millions of U.S. dollars)
For the Years Ended
January 31, 2013
January 31, 2012
Sales Revenues
$2,064.00
100%
$2,550.00
100%
Cost of Goods Sold
$1,547.00
75%
$1,811.00
71%
Selling, General, and Administrative Expenses
$ 423.00
20%
$ 436.00
17%
Other Operating Expenses
$ 43.00
2%
$ 14.00
1%
Interest Expense
$ 14.00
1%
$ 17.00
1%
Income before Income Tax Expense
$ 37.00
2%
$ 272.00
11%
Income Tax Expense
$ 6.00
0%
$ 31.00
1%
Net Income
$ 31.00
2%
$ 241.00
9%
2. Does Simultech's Cost of Goods sold for the year ended January 31, 2013, as a percentage of revenues, represent better or worse performance as compared to that for the year ended January 31, 2012? Better Worse
Answer: Worse, being the Cost of Goods Sold is increased to 75% of Sales revenue in FY13 in comparison to FY 2012 of 71%.
3. Do the percentages that you calculated for net income indicate whether Simultech's net profit margin has increased or decreased over the two years? Increased Decreased
Answer: Decreased, being in Net Income decreased to 2% in FY13 in comparison to FY12 9%.
SIMULTECH CORPORATION
Income Statement (summarized)
(in millions of U.S. dollars)
For the Years Ended
January 31, 2013
January 31, 2012
Sales Revenues
$2,064.00
100%
$2,550.00
100%
Cost of Goods Sold
$1,547.00
75%
$1,811.00
71%
Selling, General, and Administrative Expenses
$ 423.00
20%
$ 436.00
17%
Other Operating Expenses
$ 43.00
2%
$ 14.00
1%
Interest Expense
$ 14.00
1%
$ 17.00
1%
Income before Income Tax Expense
$ 37.00
2%
$ 272.00
11%
Income Tax Expense
$ 6.00
0%
$ 31.00
1%
Net Income
$ 31.00
2%
$ 241.00
9%
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