1. Using Horizontal Analysis, calculate the peso change and the percentage changes. 2. Using Vertical Analysis, prepare the comparative common-size Income Statements. 3. Evaluate the results of your Analysis and explain to the management why the net profit declined

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter9: Responsibility Accounting And Decentralization
Section: Chapter Questions
Problem 6PA: Using the information from BDS Enterprises, prepare the income statement to include all costs, but...
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Direction: Read the following independent cases given below. Provide necessary answer for all issues
being asked. Provide a separate answer sheet for all your specific answers.
A. The DIGITAL Company provided you with the following comparative Income Statement for your
analysis. He wants you to enlighten the management on why the net profit decline.
Sales
Cost of Sales
Gross Margin
Operating Expenses
Net Profit
2020
P680,000
170,000
P510,000
210,000
P300000
2021
P 570,000
200,000
P 370,000
100,000
P 270.000
Required:
1. Using Horizontal Analysis, calculate the peso change and the percentage changes.
2. Using Vertical Analysis, prepare the comparative common-size Income Statements.
3. Evaluate the results of your Analysis and explain to the management why the net profit declined.
Transcribed Image Text:Direction: Read the following independent cases given below. Provide necessary answer for all issues being asked. Provide a separate answer sheet for all your specific answers. A. The DIGITAL Company provided you with the following comparative Income Statement for your analysis. He wants you to enlighten the management on why the net profit decline. Sales Cost of Sales Gross Margin Operating Expenses Net Profit 2020 P680,000 170,000 P510,000 210,000 P300000 2021 P 570,000 200,000 P 370,000 100,000 P 270.000 Required: 1. Using Horizontal Analysis, calculate the peso change and the percentage changes. 2. Using Vertical Analysis, prepare the comparative common-size Income Statements. 3. Evaluate the results of your Analysis and explain to the management why the net profit declined.
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