Chapter 15: Q2SE (page 835)

Verifine Corp. reported the following on its comparative income statement:
(In millions)2019 2018 2017
Revenue $ 9,890 $ 9,690 $ 9,135
Cost of Goods Sold 6,250 6,000 5,890
Prepare a horizontal analysis of revenues and gross profit—both in dollar amounts
and in percentages—for 2019 and 2018.

Short Answer

Expert verified

Answer

For 2019 Revenue Increases by 200& 2.06% and COGS Increases by 250 &4.17%

for 2018 Revenue Increases by 555 & 6.08% and COGS Increases by 110 & 1.87%

Step by step solution

Horizontal analysis for 2019

2019

(A)

2018

(B)

Increase/ decrease

(C=A-B)

Percentage Increase/ Decrease

(C/B)

Revenue

9,890

9,690

200

2.06%

Cost of Goods Sold

6,250

6,000

250

4.17%

Horizontal analysis for 2018

2018

(A)

2017

(B)

Increase/ decrease

(C=A-B)

Percentage Increase/ Decrease

(C/B)

Revenue

9,690

9,135

555

6.08%

Cost of Goods Sold

6,000

5,890

110

1.87%

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ABC ATHLETIC SUPPLY, INC. Five-Year Financial Summary (Partial; adapted)
(Dollar amounts in thousands except per share data)	2018	2017	2016	2015	2014	2013
Net Sales Revenue	\(250,000	\)216,000	\(191,000	\)161,000	\(134,000
Net Sales Revenue Increase	16%	13%	19%	20%	17%
Domestic Comparative Store Sales Increase	5%	6%	4%	7%	9%
Other Income—Net	2,110	1,840	1,760	1,690	1,330
Cost of Goods Sold	189,250	164,592	148,216	126,385	106,396
Selling and Administrative Expenses	41,210	36,330	31,620	27,440	22,540
Interest:
Interest Expense	(1,080)	(1,380)	(1,400)	(1,020)	(830)
Interest Income	125	165	155	235	190
Income Tax Expense	4,470	3,900	3,700	3,320	2,700
Net Income	16,225	11,803	7,979	4,760	3,054
Per Share of Common Stock:
Net Income	1.60	1.30	1.20	1.00	0.78
Dividends	0.40	0.38	0.34	0.30	0.26
Financial Position
Current Assets, Excluding Merchandise Inventory	\)30,700	\(27,200	\)26,700	\(24,400	\)21,500
Merchandise Inventory	24,500	22,600	21,700	19,000	17,500	$16,700
Property, Plant, and Equipment, Net	51,400	45,200	40,000	35,100	25,600
Total Assets	106,600	95,000	88,400	78,500	64,600
Current Liabilities	32,300	28,000	28,300	25,000	16,500
Long-term Debt	23,000	21,500	17,600	19,100	12,000
Stockholders’ Equity	51,300	45,500	42,500	34,400	36,100
Financial Ratios
Acid-Test Ratio	1.0	1.0	0.9	1.0	1.3
Rate of Return on Total Assets	17.2%	14.4%	11.2%	8.1%	7.1%
Rate of Return on Common Stockholders’ Equity	35.5%	26.%	20.8%	13.5%	13.0%

	2018	2017
Cash	\(58,000	\)47,000
Short-term Investments	34,000	0
Net Accounts Receivable	140,000	124,000
Merchandise Inventory	217,000	272,000
Total Assets	530,000	565,000
Total Current Liabilities	288,000	205,000
Long-term Notes Payable	40,000	50,000
Income from Operations	165,000	158,000
Interest Expense	55,000	41,000

Verifine Corp. reported the following on its comparative income statement:
(In millions)2019 2018 2017
Revenue \( 9,890 \) 9,690 $ 9,135
Cost of Goods Sold 6,250 6,000 5,890
Prepare a horizontal analysis of revenues and gross profit—both in dollar amounts
and in percentages—for 2019 and 2018.

Short Answer

Step by step solution

Horizontal analysis for 2019

Horizontal analysis for 2018

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Verifine Corp. reported the following on its comparative income statement:(In millions)2019 2018 2017Revenue \( 9,890 \) 9,690 $ 9,135Cost of Goods Sold 6,250 6,000 5,890Prepare a horizontal analysis of revenues and gross profit—both in dollar amountsand in percentages—for 2019 and 2018.

Short Answer

Step by step solution

Horizontal analysis for 2019

Horizontal analysis for 2018

One App. One Place for Learning.

Most popular questions from this chapter

Recommended explanations on Business Studies Textbooks

Managerial Economics

Influences On Business

Intermediate Accounting

Nature of Business

Strategic Direction

Business Case Studies

Study anywhere. Anytime. Across all devices.

Verifine Corp. reported the following on its comparative income statement:
(In millions)2019 2018 2017
Revenue \( 9,890 \) 9,690 $ 9,135
Cost of Goods Sold 6,250 6,000 5,890
Prepare a horizontal analysis of revenues and gross profit—both in dollar amounts
and in percentages—for 2019 and 2018.