Express the following comparative income statements in common-size percent\'s (v

Question

Express the following comparative income statements in common-size percent's (vertical analysis) (Round your percentage answers to 1 decimal place.) GOMEZ CORPORATION Comparative Income Statements For Years Ended December 31, 2018 and 2017 2018 2017 ales ost of goods sold ross profit 740,000 60,300 179,700 128.200 51,500 625,000 90,800 34,200 18,500 115,700 ating expenses et income What is your analysis of the company's situation? (comment on each of the line item changes). Sales Cost of Goods Sold: Gross Profit: Operating Expenses Net Income

Explanation / Answer

GOMEZ CORPORATION

COMAPARATIVE INCOME STATEMENT

FOR THE YEAR ENDED DECEMBER 31, 2018 AND 2017

Analysis Of the Company's Situation is as follows-

1. Sales- Sales has gone up from the last year's sales. As per the last year it was $6,25,000 and in 2018 it is $ 7,40,000 showing up the increase by approximately 18.4% from the last year's data. (740000-625000)/625000. The sales should be increased so as to achieve the desired profit.

2. Cost Of Goods Sold- COGS has been increased from the last year's by 92.67% quite a large increase. Though the sales have been increased this year but the percentage of COGS with respect to Sales is more in 2018 than in 2017 that should be checked out by the production manager.

3. Gross Profit- Gross Profit ratio has gown down from tha last year's gross profit. Gomez Corporation needs to find out measures to improve its gross profit either by controlling COGS or increasing sales.

4. Operating Expenses- Operating Expenses has gone down from the last year's data by 41.32% i.e. ($2,18,500-$1,28,200)/$2,18,500. This is a good sign as company has been sccessful in reducing its operating expenses.

5. Net Profit- Net Profit has seen a downfall by approximately 55.5% from last year's data i.e. ($1,15,700-$51,500)/$1,15,500. In 2017 it was 18.5% of that year's sale but in 2018 it is 6.9% of the current year's sale that shows that company's net profit is decreasing due to the increase cost of goods sold. this could be improved either by increasing the sales or by reducing the cost.

Particulars 2018($) 2018(%) 2017($) 2017(%) Sales $7,40,000 100% $6,25,000 100% COGS $5,60,300 75.7% $2,90,800 46.5% Gross Profit $1,79,700 24.3% $3,34,200 53.5% Operating Expenses $1,28,200 17.3% $2,18,500 35.0% Net Profit $51,500 7.0% $1,15,700 18.5% Common Percentage Basis Sales Sales

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.