Corporate Financial Accounting
14th Edition
ISBN: 9781305653535
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Chapter 2, Problem 2.3ADM
To determine
(a)
Horizontal analysis of income statement:
In horizontal analysis of income statement, the amount of each item of the current year financial statement is compared with the previous year financial statement. The amount of each item increased or decreased in the current income statement, and its respective percentage can be computed by taking the earlier statement as the base.
The amount of change in millions, and the percentage of change from the Year 1 to the Year 2.
(b)
To determine
To discuss: The conclusions drawn from the analysis of the revenue, and the operating expenses.
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Students have asked these similar questions
Horizontal Analysis of Income Statement
The following data (in millions) are taken from the financial statements of Target Corporation:
Recent Year
Prior Year
Revenue
$72,618
$71,279
Operating expenses
68,083
66,109
Operating income
$ 4,535
$ 5,170
a. For Target Corporation, determine the amount of change in millions and the percent of change (round to one decimal place) from the prior year to the recent year for:
1. Revenue
2. Operating expenses
3. Operating income (For those boxes in which you must enter negative numbers use a minus sign.)
Amount of Change
Percent of Change
(in millions)
(round to 1 decimal place)
Increase or Decrease
1. Revenue
2. Operating expenses
3. Operating income
b. During the recent year, revenue
and operating expenses
As a result, operating income
from the prior
year.
Assume the following sales data for a company:
Current year $896,005
Preceding year 607,844
What is the percentage increase in sales from the preceding year to the current year (rounded to one decimal place)?
Oa. 47.4%
Ob. 15.3%
Oc. 32.2%
Od. 79.6%
Assume the following sales data for a company:
Line Item Description
Amount
Current year
$883,993
Preceding year
542,076
What is the percentage increase in sales from the preceding year to the current year?
a. 63.08%
b. 61.32%
c. 163.08%
d. 38.68%
Chapter 2 Solutions
Corporate Financial Accounting
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