Common-Size Income Statements and Horizontal Analysis Income statements for Mari

Question

Common-Size Income Statements and Horizontal Analysis

Income statements for Mariners Corp. for the past two years are as follows:

Required:

1. Using the format in Example 13-5, prepare common-size comparative income statements for the two years for Mariners Corp. Round percentages to one decimal point.

Mariners Corp.

Common-Size Comparative Income Statements

For The Years Ended December 31, 2014 And 2013 (In Thousands of Dollars)

2014 Dollars

2014 Percent

2013 Dollars

2013 Percent

  

$  

  %

$  

  %

  

  

  

  

  

Gross profit

$  

  %

$  

  %

  

  

  

  

  

  

$  

  %

$  

  %

  

  

  

  

  

  

$  

  %

$  

  %

  

  

  

  

  

Net income

$  

  %

$  

  %

2. Using the format in Example 13-2, prepare comparative income statements for Mariners Corp., including columns for the dollars and for the percentage increase or decrease in each item on the statement. Round all percentages to the nearest whole percent. If an answer is zero, enter "0"

Mariners Corp.

Comparative Statements of Income

For The Years Ended December 31, 2014 And 2013 (In Thousands of Dollars)

December 31, 2014

December 31, 2013

Increase/Decrease Dollars

Increase/Decrease (Percent)

  

$  

$  

$  

  %

  

  

  

  

  

Gross profit

$  

$  

$  

  

  

  

  

  

  

  

$  

$  

$  

  

  

  

  

  

  

  

$  

$  

$  

  

  

  

  

  

  

Net income

$  

$  

$  

  

(amounts in thousands of dollars) 2014 2013 Sales revenue $61,000 $47,000 Cost of goods sold 42,517 28,247      Gross profit $18,483 $18,753 Selling and administrative expense 9,577 4,653      Operating income $8,906 $14,100 Interest expense 1,952 1,952      Income before tax $6,954 $12,148 Income tax expense 2,000 3,500      Net income $4,954 $8,648

Explanation / Answer

1.

2.

2014 dollars 2014 percent 2013 dollars 2013 percent Sales Revenue 61000 100% 47000 100% Cost of goods sold 42517 69.7% 28247 60.1% Gross profit 18483 30.3% 18753 39.9% Selling and administrative expense 9577 15.7% 4653 9.9% Operating income 8906 14.6% 14100 30.0% Interest expense 1952 3.2% 1952 4.2% Income before tax 6954 11.4% 12148 25.8% Income tax expense 2000 3.3% 3500 7.4% Net income 4954 8.1% 8648 18.4%

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