Using the following income statements, perform the calculations needed for horiz

Question

Using the following income statements, perform the calculations needed for horizontal analyses. (Decreases should be indicated by a minus sign. Round percentage values to 1 decimal place.)

LOCKEY FENCING CORPORATION Income Statements For the Years Ended December 31 Change in Current Previous Dollars Percentage Net Sales $111,000 $80,500 % Cost of Goods Sold 63,500 47,750 Gross Profit 47,500 32,750 Selling, General, and Administrative Expenses 6,800 3,400 Income from Operations 40,700 29,350 Interest Expense 3,550 4,850 Income before Income Tax 37,150 24,500 Income Tax Expense 11,145 7,350 Net Income $26,005 $17,150 %

Explanation / Answer

LOCKEY FENCING CORPORATION Income Statements For the Years Ended December 31 Change in Current Previous Dollars Percentage Net Sales $111,000 $80,500 111,000-80,500 = 30,500 (30,500/80,500)*100 = 37.9% Cost of Goods Sold 63,500 47,750 63,500-47,750 = 15,750 (15,750/47,750)*100 = 33.0% Gross Profit 47,500 32,750 47,500-32,750 = 14,750 (14,750/32,750)*100 = 45% Selling, General, and Administrative Expenses 6,800 3,400 6,800-3,400 = 3,400 (3,400/3,400)*100 = 100% Income from Operations 40,700 29,350 40,700-29,350 = 11,350 (11,350/29,350)*100 = 38.7% Interest Expense 3,550 4,850 3,550-4,850 = -1,300 (1,300/4,850)*100 = -26.8% Income before Income Tax 37,150 24,500 37,150-24,500 = 12,650 (12,650/24,500)*100 = 51.6% Income Tax Expense 11,145 7,350 11,145-7,350 = 3,795 (3,795/7,350)*100 = 51.6% Net Income $26,005 $17,150 26,005-17,150 = 8,855 (8,855/17,150)*100 = 51.6%

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