1 0 points Sports Emporium has two operating segments: sporting goods and sports

Question

1 0 points Sports Emporium has two operating segments: sporting goods and sports apparel. The income statement for each operating segment is presented below. Required 1. Complete the"% columns to be used in a vertical analysis of Sports Emporium's two operating segments. Express each amount as a percentage of sales. (Round your answers to 1 decimal place.) SPORTS EMPORIUM Income Statement For the Year Ended December 31, 2018 Sporting Goods Sports Apparel Amount Amount $ 1,800,000 1,040,000 760,000 450,000 310,000 20,000 330,000 80,000 $ 250,000 S 970,000 440,000 530,000 340,000 190,000 (15,000) 175,000 70,000 S 105,000 Net sales Cost of goods sold Gross profit Operating expenses Operating income Other income (expense) Income before tax Income tax expense Net income 2. Use vertical analysis to compare the profitability of the two operating segments. Which segment has a higher net income as a percentage of net sales? Sporting Goods O Sports Apparel

Explanation / Answer

Vertical anaysis :

2) Sporting goods has a higher net income as a percentage of net sales

Amount Percent Amount Percent Sale 1800000 100% 970000 100% Cost of goods sold 1040000 57.8% 440000 45.4% Gross profit 760000 42.2% 530000 54.6% Operating expense 450000 25.0% 340000 35.1% Operating income 310000 17.2% 190000 19.6% Other income (expense) 20000 1.1% -15000 -1.5% Income before income tax 330000 18.3% 175000 18.0% Income tax 80000 4.4% 70000 7.2% Net income 250000 13.9% 105000 10.8%

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