1. 15.00 points E13-3 Preparing and Interpreting a Schedule for Horizontal and V
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1. 15.00 points E13-3 Preparing and Interpreting a Schedule for Horizontal and Vertical Analyses LO 13-2, 13-3, 13-5] According to the producer price index database maintained by the Bureau of Labor Statotics, the average cost of computer equipment fel &.1 percent between 2012 and 2013. Required: 1. Conduct a horzontal analysis by caloulating the year-over-year changes in each tine item, expressed in dollars and in percentages for the income statement of Computer Tycoon Inc. for the year ended December 31, 2013. (Decreases should be indicated by a minus sign. Round your percentage answers to 1 decimal place.) For the Year Ended December 31 Change ln Dollars Sales Revenue Cost of Goods Sold Gross Prott 5 103,000 124,500 61,50072,700 51,800 37.600 450 4,67013,710 41,500 Selling, General, and Administrative Expenses 36.300 530 Interest Expense Income before Income Tax Expense Income Tax Expense Net Income 1,000 s 3670 8,410Explanation / Answer
1. Horizontal Analysis
Income Statements
1. Horizontal Analysis
Income Statements
For the year December 31 Change in 2013 2012 Dollars Percentage Sales Revenue 1,03,000 1,24,500 (21,500) -17.27% COGS 61,500 72,700 (11,200) -15.41% Gross Profit 41,500 51,800 (10,300) -19.88% Selling, Genral & Admin exp 36,300 37,600 (1,300) -3.46% Interest expense 530 490 40 8.16% Income before income tax expenses 4,670 13,710 (9,040) -65.94% Income Tax 1,000 5,300 (4,300) -81.13% Net income 3,670 8,410 (4,740) -56.36% Analysis : Sales revenue is decreased by 17.27 % but net income is decraesed by 56.36% only. This is due to decrease is Selling expense is only 3.46% partially off set by decrease in income tax by 81.13% 2. Vertical analysis Income Statements For the year December 31 2013 2012 Sales Revenue 1,03,000 100.00% 1,24,500 100.00% COGS 61,500 59.71% 72,700 58.39% Gross Profit 41,500 40.29% 51,800 41.61% Selling, Genral & Admin exp 36,300 35.24% 37,600 30.20% Interest expense 530 0.51% 490 0.39% Income before income tax expenses 4,670 4.53% 13,710 11.01% Income Tax 1,000 0.97% 5,300 4.26% Net income 3,670 3.56% 8,410 6.76% Analysis : Selling, Genral & Admin exp was 35.24% of Sales revenue in 2013, whether it was only 30.20% of sales revenue in 2012. Income tax was 0.97% of Sales revenue in 2013, whether it was only 4.26% of sales revenue in 2012. 2.b Excluding income tax, interest and opearing expense, Computer tycon can not earn more profit in 2013 as compared to 2012 due to decrease in sales revenue in 2013Related Questions
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