(a)
A common size income statement is an income statement in which each record is communicated as a level of the estimation of offers. It is utilized for vertical examination, in which each detail in a fiscal report is recorded as a level of a base figure inside the statement, to make correlations simpler.
To discuss:
Why net income increased from 2017 to 2019 even cost of goods sold also increases?
(b)
Gross profit is essentially income less costs of goods sold (COGS). Declining gross profit edge is a noteworthy issue for a revenue driven business. Understanding components that add to edge diminishes places you in a superior position to respond emphatically.
A common size income statement is an income statement in which each record is communicated as a level of the estimation of offers. It is utilized for vertical examination, in which each detail in a fiscal report is recorded as a level of a base figure inside the statement, to make correlations simpler.
To discuss:
Explain what could cause sales to increase while the gross margin percentage decreases.
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Cornerstones of Financial Accounting
- Use the following hypothetical data for Walgreens in Years 11 and 12 to project revenues, cost of goods sold, and inventory for Year +1. Assume that Walgreenss Year +1 revenue growth rate, gross profit margin, and inventory turnover will be identical to Year 12. Project the average inventory balance in Year +1 and use it to compute the implied ending inventory balance.arrow_forwardMargin, Turnover, Return on Investment, Average Operating Assets Elway Company provided the following income statement for the last year: At the beginning of last year, Elway had 28,300,000 in operating assets. At the end of the year, Elway had 23,700,000 in operating assets. Required: 1. Compute average operating assets. 2. Compute the margin and turnover ratios for last year. (Note: Round the answer for margin ratio to two decimal places.) 3. Compute ROI. (Note: Round answer to two decimal places.) 4. CONCEPTUAL CONNECTION Briefly explain the meaning of ROI. 5. CONCEPTUAL CONNECTION Comment on why the ROI for Elway Company is relatively high (as compared to the lower ROI of a typical manufacturing company).arrow_forwardJuroe Company provided the following income statement for last year: Juroes balance sheet as of December 31 last year showed total liabilities of 10,250,000, total equity of 6,150,000, and total assets of 16,400,000. Required: 1. Calculate the return on sales. (Note: Round the percent to two decimal places.) 2. CONCEPTUAL CONNECTION Briefly explain the meaning of the return on sales ratio, and comment on whether Juroes return on sales ratio appears appropriate.arrow_forward
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- 1. Compute the companywide break-even point in dollar sales. 2. Compute the break-even point in dollar sales for the East region. 3. Compute the break-even point in dollar sales for the West region. 4. Prepare a new segmented income statement based on the break-even dollar sales that you computed in requirements 2 and 3. Use the same format as shown above. What is Crossfire’s net operating income (loss) in your new segmented income statement? 5. Do you think that Crossfire should allocate its common fixed expenses to the East and West regions when computing the break-even points for each region?arrow_forwardAssume the following sales data for a company:Current year$832,402 Preceding year608,082What is the percentage increase in sales from the preceding year to the current year? a.136.89% b.36.89% c.73.05% d.26.95% The relationship of $242,729 to $104,267, expressed as a ratio, is a.0.8 b.2.3 c.0.4 d.0.7arrow_forwardFind in Amount ($) and Percentage(%) for Year 2 over Year 1: Income Statement - (a) Sales Revenue (b) Cost of sales (c) Gross Marginarrow_forward
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