Assignment Gradebook ORION Downloadable eTextbook actice Exe

Assignment Gradebook ORION Downloadable eTextbook actice Exercise 14-4 The comparative condensed income statements of Emley Corporation are shown below. EMLEY CORPORATION Comparative Condensed Income Statements For the Years Ended December 31 Net sales Cost of goods sold Gross profit Operating expenses Net income 2017 $778,800 569,040 209,760 147,500 $ 62,260 2016 $708,000 495,600 212,400 141,600 $ 70%800 Prepare a horizontal analysis of the income statement data for Emley Corporation using 2016 number e.g.-45,-45% or parentheses eg. (45), (4596): Round percentages to 1 de

Solution

For horizontal analysis of each year\'s data, we will assume Net sales equal to 100% and all other figures such as cost of goods sold, gross profit, Operating expenses and net income will be calculated as a percentage of net sales. The horizontal and vertical analysis is shown as follows:-

  Emley Corporation

Condensed Income Statements

For the year ended 2016 and 2017

The net income has decreased from 10% of net sales in 2016 to 8% of net sales in 2017. The cost of goods sold has increased from 70% of net sales in 2016 to 73.1% of net sales in 2017.

Particulars	2017 (amount in $)	2017 (in %)	2016 (amount in $)	2016 (in %)
Net Sales	778,800	100%	708,000	100%
Cost of goods sold	(569,040)	(73.1%)	(495,600)	(70%)
Gross Profit	209,760	26.9%	212,400	30%
Operating expenses	(147,500)	(18.9%)	(141,600)	(20%)
Net Income	62,260	8.0%	70,800	10%